Close to half the merchants not willing to pay MDR on UPI: Survey
LocalCircles surveyed 32,796 people across districts for this study. MDR is a fee paid by businesses to payment processors for accepting digital payments.
A recent survey has found that nearly half of the country's merchants are unwilling to pay any charges on UPI transactions exceeding Rs 2000. According to the LocalCircles survey, 41% of the 32,796 merchants polled expressed this sentiment. The remaining 59% either do not accept UPI payments (9%) or would only bear minimal fees (33% would pay up to .25%).
The Minimum Discount Rate (MDR) is a fee merchants pay to payment processors for accepting digital payments. This fee was applicable until December 2019, with a maximum of 0.3% of the transaction value. However, zero MDR was introduced in January 2020. LocalCircles posed the question, "If you are a business that accepts UPI payments, what is the maximum MDR that you would be willing to bear on UPI payments above INR 2000?"
The most common response was 0% (41%), while other percentages ranged from 0.04% to 0.5%. Additionally, 9% of merchants stated they do not accept UPI payments at all. A separate survey revealed that 53% of UPI users would avoid using UPI for larger transactions if an MDR is imposed, with 27% preferring credit cards, 14% opting for debit cards, and 12% choosing cash or bank transfers.
Only 12% would continue using UPI if they had to pay the fee, and 18% would only do so if the merchant absorbed the cost.
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