In a country where today everything from tea to cars is paid for by scanning a QR code, where UPI has reduced the need to withdraw cash and carry change to a great extent, there is a decision that has raised a new question. If MDR i.e. Merchant Discount Rate is Rs. If UPI is imposed on payments of over 2000, will merchants and consumers start preferring cash again? And if this happens, will it affect not only your pocket, but also the total cash in circulation in the country, the demand for notes and the RBI’s cost of printing notes?

This is a big question. Suppose a merchant takes a large amount of UPI payment every month. If the cost of accepting digital payments increases, he may have some options. First, he has to bear the cost himself. Second, it should include its impact in its price. Third, in some cases it may force the customer to cash.

Macro-economic issues with MDR

It is for this reason that along with the MDR on UPI, a larger macro-economic question is also being raised. Could the rise in the cost of digital payments lead to further demand for cash? But there is an important caveat here. This is just speculation, not an established fact.

The imposition of MDR on UPI does not mean that people in India will return large amounts of cash. Its actual impact will depend on how merchants, consumers and the payments ecosystem absorb these costs.

Now see what the RBI data says. RBI has released money stock data on 25 September 2026. In this, currency with public column, RBI has stated how much cash is available with the public after removing the cash available with banks from the total currency in circulation. That is, in simple terms, how much cash is circulating in the hands of people and traders.

How much cash is available to the public?

Understand this figure carefully. According to this RBI table, on March 31, 2026, ₹40 lakh 65,488 crore of cash was available with the public i.e. currency with the public. While according to RBI, by September 15, 2026, this figure will increase to Rs 42 lakh 10,170 crore. After 5 and a half months, the cash available to the public has increased by about 1 lakh 45 thousand crore rupees. If we take the average, it is an increase of 3.6 percent. That is, the people of the country had this much cash in five and a half months.

But the next figure is much bigger than this. If we look at the same data as on September 15, 2026 on a year-on-year basis, till September 15, 2026, the currency with the public had increased by 13.6% which is Rs 5 lakh 3 thousand crore more in value. That is, in the last one and a half years, people in the country have increased in cash and this increase is 13.5 percent annually.

As UPI increases, so does cash.

What does that mean? It means that UPI is continuously increasing, but still the cash available to people is also increasing. The next figure is even more shocking. Cash-to-GDP ratio i.e. the ratio of cash available to the public compared to the size of the economy gives data on the current cash flow in the country. The ratio stood at 12.1% in March 2026 as against 11.7% a year ago. That means the channel of cash has increased in the last country. This data also confirms it.

Now coming back to UPI, on one hand the use of UPI is continuously increasing. On the other hand, the currency is also increasing with the masses. And now that MDR’s new system is going to roll out to some merchant UPI payments above ₹ 2,000, the question is can MDR further this trend of cash? Many experts are expressing this possibility. According to him, at large merchants or petrol pumps, customers may be asked to pay through any other mode, including cash, instead of UPI. But to know its truth we have to see what changes in people’s victim behavior after October 15.

How much does it cost?

One aspect of this also relates to the cost of printing the notes. If Rs. 1 lakh as Aadhaar on UPI Rs. 1 lakh transaction has an estimated operational cost of Rs. 66 is around. While Rs. 500 note in Rs. 1 lakh is printed, according to data available with RBI, Rs. 500 note printing cost is around Rs. 0.96 per note. Based on which this cost is 192 rupees. This is the printing cost only. After this, if you add the cost of transportation, security, cash handling, sorting, ATM/cash infrastructure, it will cost more.

In one line, the cost of cash instead of UPI is many times higher. And if the circulation of cash increases, government spending may increase. So the whole story ends here. At the beginning we asked the question, will imposition of charges on UPI increase the trend of CASH in the country? The answer to this is still not certain, but some things definitely seem to go together.

Government spending may increase

UPI has become the main means of digital payment in India. Despite this, the currency available to the public is increasing. Cash currency has increased among people. People are holding more cash. Cash has increased in the country’s economy and when it comes to the government through banks, the government’s expenses for handling it and printing new notes can also increase when the demand increases.

Now all this will be known after October 15 when the questions will be answered that if the cost of digital payments increases, will the people and businessmen of India change their payment practices? And if we do, will it only affect the shopkeeper and the customer? Or will RBI’s currency, cash demand and note printing reflect on the entire economy?