A LocalCircles survey of more than 67,000 UPI users found that only 14% would continue using UPI if merchants passed the additional cost to them. Others said they would turn to cash, credit or debit cards, bank transfers, or delay purchases.
For larger payments, 76% of respondents said they could shift away from UPI if an additional charge were imposed. Credit cards and cash emerged as the most commonly preferred alternatives.
The proposed MDR would not apply to UPI payments of ₹2,000 or less or person-to-person transfers. The government has also said merchants should not pass the MDR on to customers.
However, merchant sentiment could complicate the rollout. A separate LocalCircles survey found that only 17% of businesses were willing to absorb the proposed 0.4% MDR, while 41% said they would not bear any MDR.
The government is working on mechanisms to prevent consumers from being charged directly. The October 15 rollout could therefore become an important test of whether UPI can retain its dominance in higher-value everyday transactions without remaining entirely cost-free for merchants.