Three-Quarters of Consumers Would Stop Using UPI If Transaction Charges Are Imposed

 

With the rise in digital transactions through the Unified Payments Interface (UPI) across the country, many fintech companies have suggested that the government impose a Market Discount Rate (MDR) or transaction fee on UPI payments. According to a recent survey by the Association of Mutual Funds in India (AMFI), a large portion of consumers believe that any charges on UPI transactions would discourage usage.

Currently, there is no charge for UPI payments, while debit and credit card payments incur MDR fees. A survey by Local Circles has revealed that if charges are imposed on UPI transactions, three-quarters (75%) of consumers would discontinue its use for payments.

2,000 Rupees and Below Transactions May Attract Fees
The Goods and Services Tax (GST) Council's Fitment Committee has recommended imposing a fee on UPI transactions below ₹2,000. As per the report, a charge of ₹10 per transaction might be levied on payments below ₹2,000. The proposal is currently under consideration by the committee.

Survey Insights:

• 75% of consumers stated that they would stop using UPI if charges are imposed.
• 22% of consumers are open to using UPI even with a minimal fee.
• 57% increase in UPI transactions was recorded during the 2023-24 fiscal year.
• 44% of consumers indicated that they use UPI for amounts below ₹2,000.
• 38% of consumers use UPI for more than 50% of their monthly transactions.
• 18% would continue to use UPI even if charges are imposed.

Concerns from Small Businesses and Consumers Raised on social media
The possibility of fees on UPI transactions has sparked concern among small businesses and consumers on social media platforms. Many expressed that charges on UPI would negatively impact digital payment adoption, especially for low-value transactions. Most users have suggested that no charges should be imposed on UPI, and if implemented, these charges would result in a significant decline in its usage.