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Survey flags potential shift from UPI to cards on higher-value purchases if MDR returns
Our read
UPI MDR remains unimplemented in the near term, but even credible discussion of targeted charges will push large retailers to design high-ticket checkout journeys around cards, EMI and negotiated acquiring economics.
For operators
Prepare checkout messaging and payment-routing plans for a possible MDR pass-through on UPI purchases above ₹3,000, while noting that no immediate charge has been introduced.
Watch
Government or RBI notification explicitly authorizing UPI MDR, naming effective dates, transaction thresholds, merchant categories and exemptions.
The report,
A LocalCircles survey indicates MDR passed to consumers on UPI payments above ₹3,000 could shift higher-value purchases toward credit and debit cards. The proposed PSS Act amendment only enables future government decisions on digital-payment charges; it introduces no immediate MDR.
Reported figures
From the report. Source details below
- 53% may move away from UPI for higher-value transactions if MDR is passed on
- 27% would switch to credit cards
- 14% would switch to debit cards
- 12% would shift to cash or bank transfers
- 45,000+ UPI users surveyed
- 23.66 billion UPI transactions in July
- ₹29.88 lakh crore UPI transaction value in July
Other figures
- 322 districts
- MDR removed in 2020
Why it matters to operators
Evaluate partnerships with card issuers, acquirers and BNPL providers to protect high-value purchase conversion if UPI economics change, while treating the survey-led shift as conditional on government action.
What to watch next
- PSS Act parliamentary movement, ministry clarifications, consultation papers and NPCI circulars on UPI economics.
- Changes in government subsidy support for UPI acquiring, including bank and payment-service-provider reimbursement arrangements.
- Acquirer pricing changes, merchant communications or revised QR/payment-gateway contracts.
- Tender-mix movement in retailer data: UPI share decline above ₹3,000, rising credit-card share, higher EMI attach rates or increased checkout abandonment.
- Regulatory guidance on merchant surcharging, differential pricing and disclosure requirements.
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- Model payment acceptance cost by tender type, transaction band and category, with specific focus on baskets above ₹3,000.
- Prepare checkout routing and offer strategies that preserve UPI convenience for low-value orders while using card-linked discounts, EMI and co-branded offers for high-value purchases.
- Review merchant terms, surcharge disclosures and consumer-protection constraints before considering any MDR pass-through.
- Negotiate acquiring and payment-gateway rates early, especially for large-format retail, electronics, travel, furniture, jewellery and omnichannel merchants.
- Build customer messaging that distinguishes a potential policy consultation from an active charge to avoid premature UPI abandonment or misinformation.
The counter-case
The case against this reading — not reported by the source.
The survey measures stated intent under a hypothetical fee pass-through, not observed checkout behaviour. Even if MDR is permitted later, merchants may absorb it, apply it selectively, or steer customers through discounts rather than visibly surcharge UPI. Cards are not a frictionless substitute: they already carry merchant costs, may have lower acceptance among small retailers, and can involve credit limits, failed transactions, or weaker consumer preference for bank-account-linked payments. A ₹3,000 threshold may also be too low to meaningfully describe the higher-ticket categories where payment choice matters most.
The source
Published
First seen