Only 12% of UPI users would pay fees above Rs 3,000, LocalCircles survey finds
A proposed MDR-related charge on UPI transactions above Rs 3,000 could push users away, according to LocalCircles. Any change remains contingent on Parliament amending Section 10(A) of the Payment and Settlement Systems Act, with no implementation date announced.
What happened
Unified Payments Interface (UPI) · LocalCircles survey finds only 12% of Indian UPI users would continue using the service if MDR-related fees are passed on for
Key facts
- 12%
- Rs 3,000
- Section 10(A)
- 2007
Why this matters
Prioritize partnerships that diversify payment acceptance and preserve low-cost checkout economics if UPI fee policy changes gain legislative traction.
What to watch
- Parliamentary movement on amendments to Section 10(A) of the Payment and Settlement Systems Act.
- Ministry of Finance, RBI, NPCI, and DPIIT statements clarifying whether any MDR would apply to P2M, P2P, RuPay credit-card-on-UPI, or only transactions above a threshold.
- Publication of a consultation paper, draft rules, transaction thresholds, merchant-category exemptions, fee caps, or implementation timelines.
- NPCI and payment-aggregator data showing a decline in high-value UPI payment share or rising payment-method switching.
- Merchant association responses, especially demands for permission to surcharge customers or restore MDR economics.
- Changes in card-on-UPI adoption, BNPL usage, cash-on-delivery selection, and payment failures for carts above Rs 3,000.
- Retailer conversion and abandonment gaps between UPI and other tenders for high-AOV orders.
- Model checkout sensitivity for orders above Rs 3,000, separating UPI-funded payment, credit-card, BNPL, COD, and bank-transfer alternatives.
- Prepare payment-routing rules that present the lowest-friction tender first while retaining customer choice and regulatory compliance.
- Negotiate contingency pricing and MDR terms with acquiring banks, payment aggregators, card networks, and BNPL providers before any legislative change.
- Avoid preemptive customer surcharges; instead design clear, tested fee disclosures and merchant-funded promotional offsets for high-conversion categories.
- Increase incentives for lower-cost alternatives only if UPI pricing changes, with particular attention to large-ticket electronics, travel, fashion, furniture, and marketplace orders.
- Track whether merchants absorb charges, pass them through, impose minimum order values, or selectively disable UPI for high-value carts.