Could transaction fees drive UPI users away? Insights from recent survey

A recent survey has highlighted significant apprehensions among Unified Payments Interface (UPI) users regarding the introduction of transaction fees. According to the findings, approximately 75% of users indicated that they would cease using the platform if any fees were implemented. Conducted online between July 15 and September 20, the survey underscores the critical role UPI plays in facilitating seamless, cost-free transactions for millions of users across India.

UPI's dominance in digital payments

The survey revealed that 38% of respondents conduct over 50% of their payments through UPI, showing a clear preference for this method over traditional digital payment options like debit and credit cards. This trend signifies UPI's growing dominance in the Indian payment landscape, driven primarily by its convenience and zero-fee structure. The survey noted, "Only 22% of UPI users surveyed are willing to bear a transaction fee on payments; 75% stated that they will stop using UPI if a transaction fee is introduced."

Methodology of the survey

The survey focused on three broad areas and garnered 42,000 responses from 308 districts. However, the number of replies varied for each question, with 15,598 responses specifically addressing the transaction fee issue. The National Payments Corporation of India (NPCI) reported a remarkable 57% increase in transaction volume and a 44% rise in value for the fiscal year 2023-24 compared to the previous year.

For the first time, UPI transactions surpassed 100 billion, totaling 131 billion in a single financial year, up from 84 billion in 2022-23. In monetary terms, the total transaction value reached ₹199.89 trillion, compared to ₹139.1 trillion the previous year.

As these trends continue to evolve, the potential introduction of transaction fees could dramatically alter user engagement with UPI, raising important questions about the future of digital payments in India.