‘Think twice about accepting cash’: Retailers' body on new UPI merchant fee
Retailers body warned that the UPI fee "could undo years of progress in digital payment adoption" among India's smallest retailers.
The Retailers Association of India (RAI) has warned that the government's decision to introduce a 0.4% Merchant Discount Rate (MDR) on UPI transactions may negatively impact the adoption of digital payments among small retailers ahead of the festive season. The MDR, which applies to transactions exceeding ₹2,000, will place the burden on merchants, many of whom operate with thin margins.
RAI CEO Kumar Rajagopalan stated that small merchants may now hesitate to accept UPI payments or opt for cash instead, which could reverse the gains in digital payment adoption. The move also contradicts the government's objective of formalizing transactions, as UPI transactions that move off the network will no longer feed into GST reporting.
Rajagopalan also argued that UPI should be incentivized, rather than taxed, as it functions as a digital debit transaction without the interchange cost or credit risk associated with credit networks. Merchants contend that the cost of running the UPI network should not be shouldered by them, and the government, through NPCI, should be responsible for underwriting these costs.
Similar concerns were raised by the Clothing Manufacturers Association of India (CMAI), which said that imposing the MDR on UPI during the festive season, a critical time for merchants, could further strain an already challenged industry.
Written by urgent.news from Hindustan Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
