The Unified Payment Interface (UPI) has emerged as one of the most popular digital payment methods in India. According to a survey conducted by LocalCircles, 38% of respondents use UPI for over half of their payment transactions. Furthermore, 37% of users indicated that more than half of their total payment value is processed through UPI. This highlights UPI’s growing dominance, making it the preferred payment method for a large portion of the Indian population, primarily due to its convenience and accessibility.
Impact of Transaction Fees on UPI Usage
The survey also highlights a potential challenge: the introduction of transaction fees. A staggering 75% of users stated that they would stop using UPI if transaction fees were imposed. Only 22% of respondents said they would be willing to continue using UPI with fees, signaling a major disruption in the system if such charges are implemented.
For many users, UPI’s appeal lies in its free service model. Introducing fees would mirror the situation with credit and debit card transactions, where businesses often pass on the cost of Merchant Discount Rates (MDR) to consumers. This could make UPI less appealing, especially for small businesses and cost-sensitive customers.
Survey Insights: Diverse and Widespread Participation
The LocalCircles survey, conducted between July and September 2024, gathered feedback from over 44,000 respondents across 325 districts in India. The participants were diverse, with 65% men and 35% women, and included both urban and rural perspectives. This extensive sample provides a broad understanding of UPI usage across different demographics.
Conclusion: A Shift in UPI’s Popularity?
With UPI currently dominating India’s digital payment space, the introduction of transaction fees could trigger a sharp decline in its usage. The findings of the survey suggest that UPI’s popularity might wane if users are required to pay additional charges, potentially reshaping India’s payment ecosystem.
