UPI Payments Above Rs 2,000: 76% Users May Shift to Cash or Cards If MDR Is Passed On
A LocalCircles survey suggests 76% of UPI users could shift to cash, cards or bank transfers for payments above Rs 2,000 if merchants pass on the new MDR.
UPI’s largely free payment model is set for a change from October 15, when a 0.4% merchant discount rate (MDR) will apply to person-to-merchant transactions above Rs 2,000. While the government has said the cost should not be passed on to consumers, a LocalCircles survey suggests many users could change how they pay if merchants charge extra.
Only 14% of surveyed users said they would continue using UPI and absorb an additional fee. Another 27% said they would switch to cash, while 26% would use credit cards and 14% debit cards. Bank transfers and other payment options accounted for smaller shares.
Overall, 76% said they could move larger payments away from UPI if an additional cost was imposed.
The survey included more than 67,000 responses from users across 291 districts, although the specific questions had fewer respondents.
The MDR applies only to certain larger merchant payments. UPI transactions up to Rs 2,000 and person-to-person transfers remain free, while the government has said around 96% of merchant transactions will not be affected.
The potential impact is significant because UPI processed a record 24.51 billion transactions worth Rs 29.82 lakh crore in August 2026. Merchant payments above Rs 2,000 represented 67% of merchant transaction value.
For a Rs 5,000 purchase, 0.4% MDR would amount to Rs 20. Small charge, big debate—because apparently even ₹20 can make people reconsider their payment loyalty.
