In India, we have a peculiar habit – the minute something is no longer ‘reasonably priced,’ we collectively drop it like a hot potato. Remember when movie tickets shot up? Suddenly, everyone was an ardent fan of “home entertainment”. Now, a similar fate seems to loom over the widely popular Unified Payments Interface (UPI).
75% of users are ready to abandon UPI if transaction fees are introduced, as revealed by a recent survey. Clearly, we like our payment methods just like our chai – affordable and fuss-free.
But what does this mass exodus mean for the digital payment landscape in India?
From Convenience To Potential Burden?
UPI has truly revolutionised the way Indians make payments. Whether it’s paying the vegetable vendor or splitting the bill with friends, UPI has become the go-to choice for nearly four in ten people.
According to the survey conducted by LocalCircles, 38% of users use UPI for more than half of their transactions, while 37% rely on it for over 50% of the total value of their payments. Its ease of use and widespread availability have made it indispensable for millions.
But this could change if transaction fees are introduced. The survey shows that 75% of users won’t hesitate to hit the ‘quit’ button on UPI if any charges are imposed. Only 22% of users are willing to accept such fees. And that’s no surprise – when consumers already have free options, why pay extra? It’s like charging us for every WhatsApp message we send – outrageous!
The survey was conducted on 44,000 people across 325 districts. This comprehensive study included a wide range of demographics, with 65% men and 35% women participating. The survey also represented users from urban and rural areas, ensuring that the data reflects a broad cross-section of UPI users.
Breaking it down further, 41% of respondents were from Tier 1 cities, 30% from Tier 2, and 29% from Tier 3, 4, and rural districts.
The Fear Of MDR Haunts Consumers
One of the biggest fears among UPI users is the introduction of the Merchant Discount Rate (MDR). For those unfamiliar, MDR is the fee merchants pay when they accept payments via digital methods, such as credit or debit cards.
If MDR is extended to UPI, small businesses might pass this cost on to customers. Imagine buying a ₹20 samosa, only to be charged ₹22 because of ‘processing fees.’ The horror!
The survey suggests that this fear is real. Many users feel that once merchants are charged MDR for UPI transactions, they will inevitably hike prices to cover these costs, much like what happens with card payments. And let’s be honest – nobody likes being nickel-and-dimed for things they were once getting for free.
Also Read: Learn How To Save Yourself From The Next UPI Payment Scam
What’s At Stake?
UPI has been nothing short of a game changer for digital payments in India. According to data from the National Payments Corporation of India (NPCI), UPI transactions grew by 57% in volume and 44% in value in FY 2023-24 compared to the previous fiscal year. The total value of UPI transactions hit ₹199.89 trillion, up from ₹139.1 trillion in FY 2022-23. These numbers are nothing short of mind-boggling.
In the first three months of the current fiscal year, UPI transactions continued this upward trend, growing over 36% to reach Rs 66 lakh crore. Minister of State for Finance Pankaj Chaudhary shared in a recent Lok Sabha session, “Between April and June 2024, 4,122 crore UPI transactions worth Rs 60 lakh crore took place.“
UPI’s role in financial inclusion and enabling easy payments, particularly in rural areas, is well documented. The survey reflected this too, with 29% of participants hailing from Tier 3, 4, and rural districts. The platform’s reach has allowed it to become an integral part of the lives of millions. So, any potential disruption, like the imposition of fees, could have wide-reaching effects on both urban and rural users alike.
Globally, India leads the world in real-time transaction volume, with numbers that are threefold of its closest competitor, China. This international standing underlines the massive role UPI plays not just domestically, but also in shaping India’s digital payment ecosystem on a global stage.
The thought of paying for UPI transactions has left a bitter taste in the mouths of many. With 75% of users ready to stop using UPI if fees are introduced, policymakers need to tread carefully. It’s not just about convenience; it’s about maintaining trust in a platform that’s become central to our digital economy.
If UPI loses its cost-effectiveness, it risks falling from grace, just like overpriced popcorn at the cinema. So, will UPI remain the digital darling, or will fees force us to find new ways to pay? Only time (and some smart decision-making) will tell.
Sources: Money Control, FirstPost, Indian Express
This post is tagged under: #UPI, Digital Payments, Fintech, India Digital, UPI Fees, UPI Charges, Cashless India, Digital India, Financial Inclusion, Local Circles Survey, UPI Transactions, Indian Economy, Fintech India, UPI Fees Impact, Digital Revolution
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