End Of Free UPI May Impose ₹ 2k Crore Burden On MP Consumers
Bhopal (Madhya Pradesh): The end of free UPI from October 15 this year may impose an annual burden of around Rs 2,133 crore on the consumers of Madhya Pradesh, if the business firms and traders choose to pass the entire burden of MDR (Merchant Discount Rate) to them. MP accounts for 2.2% of the UPI transactions in the country, both in terms of volume and value. According to NPCI (National…
The removal of free UPI transactions in Madhya Pradesh may impose a substantial financial burden on consumers, estimated at around Rs 2,133 crore annually, if businesses choose to pass the Merchant Discount Rate (MDR) to them. Madhya Pradesh accounts for 2.2% of UPI transactions in India, both in volume and value. With approximately 500 crore UPI transactions per year and transactions above Rs 2,000 constituting 20% by volume and 86% by value, these transactions amount to around Rs 5.33 lakh crore.
Applying an MDR of 0.4%, merchants would be responsible for an additional Rs 2,133 crore in annual costs. While Madhya Pradesh has widely adopted UPI, with about 51% of account holders in Indore using it and 45% in Bhopal, experts disagree on whether businesses will transfer the full burden to consumers. Some suggest merchants will pass on the costs, akin to fees on credit and debit cards, while others believe businesses may absorb the charges or only partially pass them on.
Rajesh Jain, a senior chartered accountant, suggests the PSU banks and indirectly the government stand to benefit from MDR on UPI, with SBI handling the most transactions.
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