New research from the Indian School of Business warns merchant fees could revive cash usage

Recent research findings released by the Indian School of Business suggest that imposing merchant discount rates on UPI (Unified Payments Interface, the instant payment system) transactions might discourage small-scale vendors from accepting digital payments. Micro-merchants operating on thin profit margins could find digital transaction fees burdensome, prompting a return to traditional cash settlements.

Digital public infrastructure thrives on low-cost accessibility for micro-vendors and everyday consumers. Introducing fees alters the cost-benefit balance for small enterprises, shifting them away from transparent digital trails and back toward untracked cash transactions that complicate financial inclusion efforts. Small business owners and financial advisors should monitor regulatory announcements regarding payment aggregator guidelines and fee structures.

Keep abreast of upcoming policy papers from research bodies and central authorities, and evaluate alternative working capital solutions for retail clients who might face changing digital transaction costs.