Only 17% Merchants Willing To Accept 0.4% MDR On UPI Payments Above ₹2,000: Survey

A recent LocalCircles survey reveals that just 17% of merchants and businesses in India are willing to absorb a 0.4% merchant discount rate (MDR) on Unified Payments Interface (UPI) transactions over ₹2,000, as the government plans to introduce this charge from October 15. The survey polled over 32,000 merchants from 242 districts, representing businesses across the country.

Participants were divided, with 48% hailing from Tier-I districts, 33% from Tier-II regions, and 19% from Tier-III and Tier-IV areas. Following the government's announcement, Paytm and Mobikwik shares surged by up to 7%, reflecting optimism about UPI's digital payments revenue outlook. However, merchants remain cautious about the added expense.

While 41% said they would refuse any MDR charge, and 9% stated they seldom used UPI payments, only 17% expressed support for the proposed 0.4% MDR. Merchants' acceptance dwindled as the MDR increased, with fewer than 40% willing to accept rates of 0.1% or more. The government has, however, exempted UPI payments below ₹2,000 and RuPay debit card transactions from MDR charges.

Despite this, a significant 53% of UPI users in a previous LocalCircles survey indicated they might switch to alternative payment methods for transactions over ₹3,000 if merchants passed on MDR costs, including credit cards, debit cards, cash, or bank transfers.