Over half of street vendors may cut UPI acceptance if 0.4% MDR is introduced
Benchmarks Nifty23,960.60149.75FEATURED FUNDS★★★★★Motilal Oswal Midcap Fund Direct-Growth5Y Return18.38 % Invest NowFEATURED FUNDS★★★★★UTI Aggressive Hybrid Fund Regular Plan-Growth5Y Return9.24 % Invest NowEnter search…
More than 67% of street vendors in India currently accept UPI payments for transactions. A proposed 0.4% merchant discount rate could lead to reduced acceptance among vendors. Concerns arise particularly for vendor-supplier transactions, as many vendors make payments above ₹2,000. A significant portion of vendors faced additional charges from suppliers and might pass costs onto customers.
Listen to this article in summarized format
Loading...×More than half of India's street vendors surveyed by the Indian School of Business (ISB) said they would reduce acceptance of UPI payments if a proposed 0.4% merchant discount rate (MDR) is levied on transactions above ₹2,000, raising concerns that the move could encourage a shift back to cash.The likelihood of reducing UPI acceptance was higher among vendors in Tier 1 cities, at 53%, compared with 45% in Tier 2 cities, according to preliminary findings of a study by ISB's Centre for Analytical Finance (CAF).
The study, conducted by Prasanna Tantri, Anand Sudhakaran and Mohan Ramanath, was based on a telephonic survey of 722 randomly selected street vendors across 14 states and Union Territories between September 24 and October 10, 2026. The sample covered vendors across 64 urban local bodies.
The research examined how vendors could respond to the proposed 0.4% MDR on UPI transactions exceeding ₹2,000. While most retail transactions were below this threshold, around 70% of surveyed vendors made bulk purchases from suppliers involving payments above ₹2,000, Sridharan, who presented the findings, said.
Supplier payments pose bigger concern
Live Events
The findings suggest that the proposed charge could have a more significant bearing on vendor-supplier transactions than on payments received from customers.
Around 67% of surveyed vendors currently accept UPI payments, while only 52% were aware of the proposed MDR. More than half said they would reduce UPI acceptance if the charge were introduced.
The study also found that vendors facing additional charges from suppliers were more likely to pass on the cost to customers. Around 30.8% of vendors who had encountered such surcharges said they would transfer the additional cost to customers, compared with 16.2% among those who had not faced them.
Researchers also found a greater inclination among vendors with high-value supplier transactions to shift to cash payments to avoid the proposed levy.
Responding to a question on whether vendors would prefer switching to cash or passing on the cost to customers, Tantri said the key concern was the difficulty of avoiding large-value supplier payments. For vendors making such transactions, the additional charge could account for a significant share of their daily net margins, making a switch to cash more attractive.
Digital transaction data benefits need to be considered
Tantri said the study had not examined specific alternatives to the proposed MDR. However, he argued that the existing accounting of payment costs did not adequately factor in the benefits generated by digital transaction data.
He also cautioned that a shift towards cash-based transactions could undermine some of the benefits of government initiatives such as PM SVANidhi.
Add as a Reliable and Trusted News Source Add Now!
(You can now subscribe to our Economic Times WhatsApp channel)
Read More News onstreet vendors UPI acceptanceIndian School of Business studycash transactions street vendorsdigital payment concerns India
(You can now subscribe to our Economic Times WhatsApp channel)
Read More News onstreet vendors UPI acceptanceIndian School of Business studycash transactions street vendorsdigital payment concerns India Prime ExclusivesInvestment IdeasStock Report PlusePaperWealth Edition
Some elections matter more than you know: No crop changed in the fields, yet sugar, coffee and soya got cheaper in a day
You can buy a walkie-talkie online. But can you legally use it?
KYB and KYC: Quick commerce, the Damani premium and what DMart must deliver – 3rd and concluding part
KYC and KYB: Inside Damani’s DMart, the retail chain for the middle class. And stock for the long term? – Part 2 of 3
Will it be a regulatory nightmare if an exchange lists on its own platform?
KYC and KYB: Inside Damani’s Avenue Supermarts that refuses to charge more – Part 1 of 3
- 1
- 2
- 3
& personalised newslettersLogin NowUnlimited AccessStarting @ Rs120/monthGet access to exclusive stories, expert opinions &
in-depth stock reportsSubscribe NowET
Unlock Access to All Exclusives with ETPrime FREE TRIAL
15 Days Free: Unlock All ETPrime Exclusives, Market Tools & ePapers
Trial offer expiring in00 : 05 : 00
I'd rather pay ₹2599 nowUh-oh! This is an exclusive story available for selected readers only.
Worry not. You’re just a step away.
Prime Account Detected!
It seems like you're already an ETPrime member with
Login using your ET Prime credentials to enjoy all member benefits
Log out of your current logged-in account and log in again using your ET Prime credentials to enjoy all member benefits.
Unlock ETPrime's Exclusive Stories Today!
Big Price Drop! Flat 40% Off
Student Only OfferAlready a Member? Sign In nowAlready a Member? Sign In nowAlready a Member? Sign In nowOffer Exclusively For You
Save up to Rs. 700/-
ON ET PRIME MEMBERSHIP
Avail OfferOffer Exclusively For You
Get 1 Year Free
With 1 and 2-Year ET prime membership
Avail OfferOffer Exclusively For You
Get 1 Year Free
With 1 and 2-Year ET prime membership
Avail OfferOffer Exclusively For You
Get Flat 40% Off
Then ₹ 1749 for 1 year
Avail OfferOffer Exclusively For You
ET Prime at ₹ 49 for 1 month
Then ₹ 1749 for 1 year
Avail OfferSpecial Offer
Get flat 40% off on ETPrime
Avail OfferAvail OfferClaim NowAlready a Member? Sign In nowNeed Assistance?
Connect with an ETPrime expert for personalized support and guidance
+91 9484700004'; }); } if(listing) { var h3 = "You tried reading " + listArr.length + " locked stories in the past " + threshold + " days.", h4 = "Become an ET Prime member and don't miss out on these exclusive stories."; var html = '' + h3 + '
' + h4 + '
- ' + listing + '
What’s Included with
ETPrime Membership
1Exclusive Insights That Matter
Uncover the truth with our investigative stories
Make strategic moves using the real-world case studies
Read industry-specific stories to identify emerging trends
Spot opportunities with in-depth insights that matter
Trump temper on H-1B visas is forcing Indians to do these things to stay put in US
What Adani’s US indictment means for India Inc’s overseas fundraising
Why veterans like Reliance, L&T are on acquisition spree? Aswath Damodaran has an answer.
Will China’s dollar bond sale in Saudi Arabia trump the US in financial world?
Huawei launches its own OS to compete with Google and Apple. But can it win beyond China?
The problem with lab grown diamonds
Why a falling rupee is a better option for the economy
A list of top 20 momentum stocks that have delivered massive returns in one year
2Invest Wisely With Smart Market Tools & Investment Ideas
Alpha Trade
Get daily trade ideas from SEBI-registered research analysts.
Investment Ideas
Grow your wealth with stock ideas & sectoral trends.
Stock Reports Plus
All-in-one stock research with Stock Score, peer comparison & key signals.
BigBull Portfolio
Get to know where the market bulls are investing to identify the right stocks.
Stock Analyzer
Check the score based on the company's fundamentals, solvency, growth, risk & ownership to decide the right stocks.
Market Mood
Analyze the market sentiments & identify the trend reversal for strategic decisions.
Stock Talk Live at 9 AM Daily
Ask your stock queries & get assured replies by ET appointed, SEBI registered experts.
3Stay informed anytime, anywhere with ET ePaper
ePaper - Print View
Read the PDF version of ET newspaper. Download & access it offline anytime.
ePaper - Digital View
Read your daily newspaper in Digital View & get it delivered to your inbox everyday.
Wealth Edition
Manage your money efficiently with this weekly money management guide.
TOI ePaper
Read the PDF version of TOI newspaper. Download & access it offline anytime.
Deep Explainers
Explore the In-depth explanation of complex topics for everyday life decisions.
Health+ Stories
Get fitter with daily health insights committed to your well-being.
Personal Finance+ Stories
Manage your wealth better with in-depth insights & updates on finance.
5Enjoy Complimentary Subscriptions From Top Brands
Stream new documentaries from all across the world every day.
Stories you might be interested in
Figures reflect the source report and its stated period. This article is for information and is not investment advice.
