Survey flags potential shift from UPI to cards on higher-value purchases if MDR returns
A LocalCircles survey of 45,000+ users finds 53% may avoid UPI for transactions above ₹3,000 if merchant discount rates are passed on. The proposed PSS Act changes do not introduce an immediate charge; any MDR move would need separate government notification.
What happened
A LocalCircles survey indicates MDR passed to consumers on UPI payments above ₹3,000 could shift higher-value purchases toward credit and debit cards. The
Key facts
- ₹3,000 transaction threshold
- 53% may move away from UPI for higher-value transactions if MDR is passed on
- 27% would switch to credit cards
- 14% would switch to debit cards
- 12% would shift to cash or bank transfers
- 45,000+ UPI users surveyed
- 322 districts
- 23.66 billion UPI transactions in July
- ₹29.88 lakh crore UPI transaction value in July
- MDR removed in 2020
Why this matters
Evaluate partnerships with card issuers, acquirers and BNPL providers to protect high-value purchase conversion if UPI economics change, while treating the survey-led shift as conditional on government action.
What to watch
- Government or RBI notification explicitly authorizing UPI MDR, naming effective dates, transaction thresholds, merchant categories and exemptions.
- PSS Act parliamentary movement, ministry clarifications, consultation papers and NPCI circulars on UPI economics.
- Changes in government subsidy support for UPI acquiring, including bank and payment-service-provider reimbursement arrangements.
- Acquirer pricing changes, merchant communications or revised QR/payment-gateway contracts.
- Tender-mix movement in retailer data: UPI share decline above ₹3,000, rising credit-card share, higher EMI attach rates or increased checkout abandonment.
- Regulatory guidance on merchant surcharging, differential pricing and disclosure requirements.
- Model payment acceptance cost by tender type, transaction band and category, with specific focus on baskets above ₹3,000.
- Prepare checkout routing and offer strategies that preserve UPI convenience for low-value orders while using card-linked discounts, EMI and co-branded offers for high-value purchases.
- Review merchant terms, surcharge disclosures and consumer-protection constraints before considering any MDR pass-through.
- Negotiate acquiring and payment-gateway rates early, especially for large-format retail, electronics, travel, furniture, jewellery and omnichannel merchants.
- Build customer messaging that distinguishes a potential policy consultation from an active charge to avoid premature UPI abandonment or misinformation.