Majority of customers say they will drop UPI payment method if a transaction fee is charged: Survey

A survey conducted by Localcircles revealed that the majority of customers will stop using UPI if a transaction fee is levied on the payments.

Out of a total of 34,000 responses from citizens in over 364 districts, 73% said they are not willing to pay any transaction fee on UPI while 23% of respondents were okay with bearing a fee.

The survey revealed that a portion of platforms or merchants are imposing either a convenience fee or transaction charge for UPI transactions. Among the surveyed UPI users, 37% reported experiencing one or more instances of this practice within the past 12 months.

In the survey, most consumers highlight the ₹20 convenience fee imposed by IRCTC for UPI payments as a prevalent example. Additionally, numerous other payment gateways have been noted for levying transaction fees on UPI transactions for merchants, leading some merchants to pass these charges on to consumers.

The survey consisted of 67% of male respondents and 33% of women.

Earlier in August 2022 the Reserve Bank of India had proposed a tiered structure of charge on payments made through UPI based on different amount bands. After this discussion paper, the Finance Ministry clarified that as of now there is no such proposal to levy any transaction fee on UPI transactions.

What is UPI?

The Unified Payments Interface serves as India's mobile-centric rapid payment system, enabling customers to conduct instant transactions around the clock using a Virtual Payment Address established by the user.

As per data from the Central government, UPI transactions within the country have surged from 92 crore in the fiscal year 2017-18 to 8,375 crore in 2022-23, marking a compound annual growth rate of 147% in terms of volume. Additionally, the value of UPI transactions has ascended from ₹1 lakh crore in 2017-18 to ₹139 lakh crore in 2022-23, representing a CAGR of 168%.

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