Transaction Fees are a popular topic worldwide, not just in the US

A recent survey conducted by LocalCircles reveals that 75% of UPI users in India might discontinue using the platform if transaction fees are implemented. The findings underscore growing user concerns about the potential financial burden being shifted to consumers.

The survey highlights that the majority of UPI users could reconsider using the service if charges are introduced. According to LocalCircles, 75% of users indicated they would stop relying on UPI should transaction fees come into effect.

UPI has become an essential payment method for many in India. The survey revealed that 38% of participants use UPI for more than half of their payment transactions, while 37% said over half of the total value of their payments is processed via UPI. This indicates that nearly 4 in 10 users prefer UPI for their payments due to its convenience and widespread use, making it one of the most popular digital payment platforms in the country.

However, the introduction of transaction fees could cause significant disruptions. The survey found that only 22% of users would be willing to accept charges on UPI transactions. Many are concerned that if businesses are required to pay fees on UPI, these costs will eventually be transferred to customers, similar to how credit or debit card fees are passed along.

There is also growing apprehension that if the government permits merchants to be charged a Merchant Discount Rate (MDR) for UPI payments, this additional cost will ultimately fall on consumers, making UPI less appealing—especially for small businesses and individual users.

The widespread concerns reflected in the survey suggest that imposing transaction fees on UPI payments could significantly reduce its usage, despite its current popularity.