Archive · 21 Sep 2026
Rajiv Kumar Warns UPI MDR Could Encourage Cash Payments
Rajiv Kumar is worried that charging a fee on some UPI payments could make people use cash again.
He said merchants may not want to pay the fee themselves.
Because of that, they might ask customers to pay with cash.
Most UPI payments are small when counted one by one.
However, many of the total rupees moved through UPI come from payments above Rs 2,000.
Petrol purchases can become larger than Rs 2,000 quite quickly.
Kumar believes people are still building the habit of paying digitally.
He thinks fees should wait until digital payments are used for most transactions by value.
Otherwise, the shift away from cash could slow down.
Former NITI Aayog vice chairman Rajiv Kumar warned that UPI MDR could encourage some merchants and customers to return to cash.
He said 96% of UPI transactions by count are below Rs 2,000, while 66% by value are above Rs 2,000.
Kumar cited petrol purchases as an example because bills can quickly exceed Rs 2,000.
He said merchants required to pay a fee may encourage customers to use cash instead of digital payments.
Kumar recommended delaying fees until digital payments become more widespread by value and cash usage declines further.
- Who
- Rajiv Kumar, the former vice chairman of NITI Aayog.
- What
- He warned that UPI MDR could discourage digital payments and encourage a return to cash.
- Why
- Because merchants may have to pay the fee and could encourage customers to use cash, potentially weakening the habit of digital payments.
- Speaker
- Rajiv Kumar, former vice chairman of NITI Aayog
- Issue
- The possible effect of UPI MDR on digital and cash payments
- Transactions by count
- 96% are below Rs 2,000
- Transactions by value
- 66% are above Rs 2,000
- Example cited
- Petrol purchases can exceed Rs 2,000 quickly
- Main concern
- Merchants may encourage cash payments to avoid paying the fee
- Recommendation
- Delay introducing fees until digital payments become more widespread by value