Anew survey shows that most users of India’s Unified Payment Interface (UPI) might stop using it if transaction fees are introduced. The survey, conducted by LocalCircles, suggests that 75 per cent of users would no longer rely on UPI if such charges are applied.
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UPI has become a key part of how many people make payments in India. According to the survey, 38 per cent of respondents said they use UPI for over half of their payment transactions. Similarly, 37 per cent said more than half of the total value of their payments is handled through UPI. This shows that UPI is now a preferred way of paying for nearly 4 out of 10 users. Its ease of use and widespread availability has made it one of the most popular digital payment methods in India.
The introduction of any transaction fee on UPI payments could cause major disruptions. The survey found that only 22 per cent of users are willing to accept a fee on UPI transactions. Most users fear that if businesses start paying fees on UPI, these costs will be passed on to customers, just like with credit or debit card payments.
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Many users are worried that if the government allows merchants to be charged a Merchant Discount Rate (MDR) for UPI transactions, the additional cost will eventually fall on consumers. This is similar to what happens when merchants charge extra for payments made with credit or debit cards. For small businesses and consumers, this would make UPI less attractive.
The survey was carried out from mid-July to mid-September 2024, collecting responses from over 44,000 people across 325 districts in India. It reflects a diverse range of users, with 65 per cent of participants being men and 35 per cent women, and responses coming from a mix of urban and rural areas.
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This growing concern among users suggests that any decision to introduce fees on UPI transactions could lead to a significant drop in its usage, despite its current popularity.
