Four in five Mumbaikars unwilling to bear MDR fee on UPI payments above ₹2,000: study

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

With the 0.4% MDR on UPI payments start date two weeks away and pass-through the biggest open risk, LocalCircles asked Mumbai residents what they would do if a merchant added the fee to their bill. LocalCircles’ survey received over 6,500 responses from consumers located in Mumbai, while in a national consumer survey of over 67,000 UPI users across 291 districts, only 14% said they would continue using UPI if a merchant passed on the fee. 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 apply to person-to-merchant (P2M) UPI payments above ₹2,000, ending more than six and a half years of zero MDR on UPI. The Ministry of Finance notified the framework on September 14, 2026, through gazette notification S.O. 5067(E). The 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, as per NPCI’s Statewise data for April 2026.

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

Associations’ resistance

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

The Maharashtra Chamber of Commerce, Industry and Agriculture (MACCIA), with around 500 affiliate associations, has also backed the protest. On Wednesday (September 30, 2026), a CAIT-led delegation of trade leaders met the Finance Minister and was assured that its concerns would be considered. FRTWA, however, has refused to call it off and says over 150 traders’ associations back it.

The survey findings show that most Mumbai consumers will not pay a UPI fee at the counter. If a merchant passes on the MDR on a payment above ₹2,000, only 21% of Mumbai residents surveyed will continue with UPI. 29% will switch to a credit card, 20% will pay in cash and 17% will switch to a debit card. Going forward, 75% expect to use cards, cash or bank transfers most often for such purchases. Mumbai’s consumers lean towards cards more than the rest of India.