Seven out of 10 UPI users said they will stop using the application if transaction fees are levied on the same, said a survey of 34,000 respondents by Local Circles, a pollster on governance and public issues.
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UPI recorded a transaction value of over ₹16 lakh crore in February 2024, up from over ₹12 lakh crore in February last year, according to data from the National Payments Corporation of India (NPCI). The most common example of a transaction fee is the ₹20 fee by IRCTC for UPI payments.
Fintech companies urged finance minister Nirmala Sitharaman to raise issues about implementing a merchant discount rate (MDR) in UPI transactions.
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“The MDR on UPI payments has been a long standing demand from the fintech industry, asserting they don’t generate revenue from such transactions. MDR is the rate charged to a merchant for payment processing services on various payment instruments”, said the report.
The Reserve Bank of India released a discussion paper in August 2022 on a tiered structure charge on UPI payments based on different amount bands. The finance ministry later clarified that there was no proposal to levy convenience fees for UPI transactions.
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“Several other payment gateways have also been reported to be charging a transaction fee for UPI transactions from merchants, some of who end up passing the same to the consumer,” the report said.
