Four out of five Mumbaikars unwilling to bear MDR charge for UPI payments above ₹2,000: study

Image for representation purposes. | Photo credit: Reuters

As many as four out of five Mumbaikars are unwilling to pay the MDR fee for using UPI for payments above ₹2,000 if the merchant passes it on, says a study by LocalCircles. A study released on Thursday (October 1, 2026) shows that 29% of Mumbai residents will switch to a credit card, 20% will switch to cash and 17% will switch to a debit card if a fee is charged for UPI payments above ₹2,000.

With the start date of 0.4% UPI payments two weeks away and the biggest open risk having been transferred, LocalCircles asked Mumbai residents what they would do if a merchant added a charge to their bill. The LocalCircles survey received over 6,500 responses from consumers in Mumbai, while in a nationwide consumer survey of over 67,000 UPI users in 291 districts, only 14% said they would continue to use UPI if the merchant moved the charge. 27% would pay in cash and 26% would switch to a credit card.

According to the survey, 75% of Mumbai residents surveyed expect to use cards, cash or bank transfers most often for purchases above ₹2,000 if UPI costs extra.

The central government’s decision to charge a merchant discount rate (MDR) of 0.4% will be effective from October 15 and will apply to merchant-to-merchant (P2M) UPI payments above ₹2,000, ending more than six-and-a-half years of zero MDR on UPI. The Treasury announced the framework on 14 September 2026 via Gazette SO 5067(E). MDR is capped at ₹300 per transaction for payments of ₹75,000 and above.

Maharashtra is India’s largest UPI market with 9.84% of all UPI transactions by volume and 9.11% by value, according to NPCI Statewise data for April 2026.

In a national survey released on September 16, 2026, only 17% of merchants said they were willing to bear 0.4% MDR on UPI payments above ₹2,000.

Union opposition

The Federation of Retail Traders Welfare Association (FRTWA), which represents around six million retailers in Mumbai, led the call for a ‘No UPI Day’ on Friday (October 2, 2026). Its president Viren Shah warned that “although it is 0.4% today, there is no guarantee it will not be 0.75% or more”.

The Maharashtra State Chamber of Commerce, Industry and Agriculture (MACCIA) with around 500 affiliated associations also supported the protest. On Wednesday (September 30, 2026), a CAIT-led delegation of business leaders met the Finance Minister and was assured that their concerns would be considered. However, FRTWA has refused to withdraw it and says more than 150 trade associations support it.

Survey results show that most consumers in Mumbai will not pay the UPI charge over the counter. If the merchant passes MDR on payment above ₹2,000, only 21% of surveyed Mumbai residents will continue with UPI. 29% will switch to a credit card, 20% will pay with cash and 17% will switch to a debit card. In the future, 75% expect that they will most often use cards, cash or bank transfers for such purchases. Consumers in Mumbai are more inclined towards cards than in the rest of India.

Published – 01 Oct 2026 15:07 IST