Close to half the merchants not willing to pay MDR on UPI: Survey

Almost half of the merchants in the country refused to pay any charges (Minimum Discount Rate) on UPI transactions above Rs 2000, a survey reveals. According to a survey by LocalCircles, 41% of the total merchants surveyed said this. While 9% said they did not accept any UPI payments, 33 % said that they would pay .25% or less.

LocalCircles surveyed 32,796 people across districts for this study. MDR is a fee paid by businesses to payment processors for accepting digital payments. An MDR of up to 0.3% of the transaction value applied to UPI person-to-merchant transactions until December 2019. Zero MDR was introduced in January 2020. 

“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?” was the question posed by Local Circles. “This question received 32,796 responses. In response, the largest group at 41% said they would not bear any MDR charges. 15% said 0.04%, 12% said 1%, 8% said 0.25%, 5% said 0.5%, 5% said 0.2%, 5% said 0.1% and 0% said 0.08%. A further 9% said they do not accept UPI payments,” said LocalCircles in a statement. 

LocalCircles conducted another survey this month, which received over 45,000 responses from UPI users located across 322 districts of India. “The survey found that 53% of UPI users surveyed would move away from UPI for higher-value transactions if an MDR is levied and recovered from them — 27% said they would switch to credit cards, 14% to debit cards and 12% to cash or bank transfers. Only 12% said they would pay the fee and continue using UPI, while another 18% said they would continue only if the merchant absorbed the cost,” it says.