Over half of street vendors may cut UPI acceptance if 0.4% MDR is introduced: ISB study
More than 67% of street vendors in India currently accept UPI payments for transactions. A proposed 0.4% merchant discount rate could lead to reduced acceptance among vendors. Concerns arise particularly for vendor-supplier transactions, as many vendors make payments above ₹2,000. A significant portion of vendors faced additional charges from suppliers and might pass costs onto customers.
A recent ISB study reveals that over half of India's street vendors could reduce UPI payments acceptance if a 0.4% merchant discount rate (MDR) is introduced on transactions over ₹2,000. This could push vendors back towards cash transactions, according to preliminary findings. The study, conducted by ISB's Centre for Analytical Finance, surveyed 722 street vendors across 14 states and Union Territories between September 24 and October 10, 2026.
Vendors in Tier 1 cities were more likely to reduce UPI acceptance (53%) compared to Tier 2 cities (45%). Most vendors currently accept UPI payments (67%), but only half were aware of the proposed MDR. Around 67% said they would reduce UPI acceptance if the charge were implemented. The research suggests the charge would have a greater impact on vendor-supplier transactions than on payments received from customers.
Around 30.8% of vendors facing additional charges from suppliers said they would pass on the cost to customers, compared to 16.2% among those not facing such surcharges. The study also found that vendors with high-value supplier transactions were more inclined to switch to cash payments. Researchers noted that the study did not explore alternatives to the proposed MDR, but suggested that the existing accounting of payment costs does not account for the benefits of digital transaction data.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
