HYDERABAD: A street vendor accepting a UPI payment may be just a scan away from completing a sale. But if proposed charges on digital transactions come into force, many could think twice before displaying that QR code.
In Telangana, where nearly four out of five street vendors accept UPI payments, 34.43% say they would reduce their acceptance of digital payments if the proposed Merchant Discount Rate (MDR) framework is implemented, according to a study by the Indian School of Business (ISB).
The finding presents an interesting contrast: Telangana ranks second among the 14 states and Union Territories surveyed in UPI adoption, with 79.22% of vendors accepting digital payments, behind Odisha (80.49%). Yet, only 41.56% of vendors in the state have heard about the proposed charges, well below the national average of 52%.
The dependence on digital payments is evident from another finding. UPI accounts for an average of 57.95% of transactions among vendors in Telangana who accept digital payments.
Titled “UPI Utilisation and MDR Awareness Among Street Vendors”, the study was conducted by ISB’s Professor Prasanna Tantri, executive director of the Centre for Analytical Finance (CAF), along with co-authors Anand Sudhakaran and Mohan Ramanath. It covered 722 vendors across 64 urban local bodies between September 24 and October 10, 2026.
The proposed framework envisages a 0.4% charge on transactions exceeding Rs 2,000, while exempting small merchants receiving up to 1 lakh a month through QR-based payments. Its implementation, initially scheduled for October 15, was postponed by the National Payments Corporation of India until after Diwali. A fresh date is yet to be announced.
The concerns, however, go beyond individual sales. Nearly 70% of surveyed vendors make payments exceeding Rs 2,000 to suppliers in a single transaction, bringing these purchases within the proposed framework. In the 10 days before the survey, 10.4% of vendors said their suppliers had already asked them to pay additional charges for UPI transactions. All of them said they would switch to cash if such charges continued.
The possibility of passing on the cost to customers is another concern. Around 30% of vendors in Tier-1 cities said they would transfer the additional charge to consumers, compared with 14% in Tier-2 and 19% in Tier-3 cities.
Nationally, between 45% and 53% of vendors across city categories said they would reduce UPI acceptance if charges were introduced. The proportion was highest in Tier-1 cities.
The researchers cautioned that these responses reflect vendors’ stated intentions, not actual changes in payment behaviour. Professor Tantri said the team planned to revisit the vendors over the next year to track any changes.