73% users will stop using UPI if transaction fee is levied: Survey

73% of UPI (Unified Payments Interface) customers will stop using the service if a transaction fee is introduced while only 25% of UPI users surveyed are willing to bear a transaction fee on payments, according to a survey by LocalCircles.

The survey received over 32,000 responses from UPI users located in over 376 districts of the country.

Taking up the sensitive issue of UPI transaction fee, the survey asked, “According to you, if charges were to be introduced on UPI transactions, what format should be used?” Out of 16,295 UPI users who responded to the question 12% stated “fixed fee per transaction”; 2% of respondents stated “fee that is a percentage of the transaction”; 11% of respondents stated "fixed fee up to a certain threshold and a percentage of transaction value above that”; 73% of respondents, however, stated "there should be no charge on UPI transactions and I will stop using if a charge is introduced” and 2% of respondents did not give a clear answer.

This comes after the Payments Council of India (PCI), a representative body of digital payment platforms, wrote to the Prime Minister demanding an introduction of a 0.3% merchant discount rate (MDR) on UPI transactions. PCI has also sought to introduce an MDR structure on RuPay debit card transactions applicable to merchants of all sizes. MDR is the fee that merchants pay banks or companies processing payments for executing a transaction. It is also a fee that differentiates UPI from Credit Cards where the MDR is levied on merchants, many of whom pass it on to the consumer, thereby discouraging them to use credit cards.

UPI has grown at a compounded annual growth rate (CAGR) of 89.3% in volume and 86.5% in value over the past five years, becoming a dominant digital payment method in India. The contribution of UPI to the cumulative digital payments ecosystem has more than doubled in this period, rising from 34% in 2019 to 83% in 2024, according to data from the Reserve Bank of India’s (RBI) payment system report. In 2024, India recorded 208.5 billion digital payment transactions. Of this, the volume of UPI transactions was ₹17,221 crore, a 57% increase from the previous year. In 2023-24, the number of UPI transactions was 131 billion, a 57% increase from the previous year.

Meanwhile, 40% of UPI users surveyed say that they have experienced a transaction fee being levied on their UPI payment once or more in the last 12 months; Percentage rose slightly from 37% in 2024 to 40% in 2025. Some UPI users have complained on social media about being charged transaction fees. The survey next asked UPI users, “How often have you experienced that a transaction fee was levied on your UPI transaction in the last 12 months?” Out of 16,445 UPI users who responded to the question, 15% stated “10 times or more”; 11% of respondents stated “6-9 times”; 8% of respondents stated “3-5 times”; 6% of respondents stated “once or twice”. However, 60% of respondents stated “never”.

This finding is surprising because so far there has been no government directive or information on a transaction fee being levied on UPI users. LocalCircles said it plans to share the survey findings with the finance ministry and the RBI so that there is more clarity and transparency.