New Delhi, November 4, 2026 (Yes Punjab News)
Around 53 per cent of vendors in Tier 1 cities and 45 per cent each in Tier 2 and Tier 3 cities have indicated that they may reduce UPI acceptance if the proposed merchant discount rate (MDR) framework is implemented, according to a study released by the Indian School of Business (ISB) on Wednesday.
The study, conducted by ISB’s Centre for Analytical Finance (CAF), also found that some vendors may pass on the additional cost to customers. Around 30 per cent of surveyed vendors in Tier 1 cities said they would consider doing so, compared with 14 per cent in Tier 2 and 19 per cent in Tier 3 cities.
The findings highlight the need to increase awareness of existing regulations that prohibit merchants from adding MDR charges to customer bills, the study noted. It found that 67 per cent of surveyed street vendors accept UPI payments, but only 52 per cent were aware of the proposed MDR framework.
Announced in September 2026, the framework proposes a 0.4 per cent charge on transactions above Rs 2,000, while exempting small merchants receiving up to Rs 1 lakh per month through QR-based payments. The rollout, initially scheduled for October 15, was postponed by the National Payments Corporation of India (NPCI) on October 13 until after Diwali. A revised implementation date is yet to be notified.
UPI adoption varied across city tiers, with 82 per cent of vendors in Tier 1 cities accepting digital payments, compared with 66 per cent in Tier 2 and 64 per cent in Tier 3 cities.
Awareness of the proposed framework did not necessarily mean vendors understood whether it applied to them. Among those who had heard about MDR, 48 per cent in Tier 1, 46 per cent in Tier 2 and 33 per cent in Tier 3 believed the charge would apply to them.
Nearly 70 per cent of surveyed vendors make supplier payments exceeding Rs 2,000 at a time, placing these transactions within the threshold covered by the proposed framework. Additionally, 10.4 per cent said their suppliers had asked them to pay extra charges for UPI transactions in the 10 days before the survey.
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