83% of shopkeepers unwilling to pay UPI charges:If cost is passed on to customers, 86% will not make UPI payments: LocalCircles survey

Charges being introduced on selected UPI payments from 15 October could lead to a 10% decline in the total value of transactions and a 4% fall in the number of payments. As many as 83% of shopkeepers are unwilling to pay the charge themselves. If shopkeepers pass on the cost to customers, 86% of people will not pay through UPI. This was revealed in a survey by LocalCircles. Under the new rules, a 0.4% charge (MDR) will be levied on UPI merchant payments of more than ₹2,000. The government wants shopkeepers to pay this charge. Are merchants willing to pay the 0.4% MDR fee? LocalCircles found in a survey of more than 32,000 businesses across 242 districts in the country that only 17% of merchants are willing to bear the 0.4% MDR burden. What will customers do if shopkeepers pass the charge on to them? According to a survey of more than 67,000 UPI users across 291 districts, 76% of users said they would switch from UPI to other options for payments above ₹2,000. What share of the total UPI market is accounted for by merchant transactions above ₹2,000? Payments above ₹2,000 account for less than 5% of all UPI payments made to merchants in terms of volume. Their share is much larger in terms of value. These high-value payments account for around 67% of the total money spent at shops, amounting to approximately ₹6 lakh crore every month. This amount is around 20% of the total value of all UPI transactions across the country. In other words, while large transactions are fewer in number, they account for a substantial share of the money circulating in the market. What options can merchants explore to reduce the burden of fees? As 83% of merchants are unwilling to pay MDR, they can either openly recover the fee from customers as a surcharge, add it to the prices of products or services, or ask customers to use other payment modes such as cash or cards.