The notices have appeared at shops as traders voice concerns over the proposed 0.4 per cent charge.
Traders in Ghaziabad have started putting up notices outside their shops saying “UPI Payment Will Not Be Accepted” in protest against the proposed Merchant Discount Rate (MDR) on selected UPI transactions above Rs 2,000 from October 15. They say that although the government has said the MDR will be charged to merchants, the additional cost could eventually affect customers.
They argue that merchants may not be willing to absorb the additional cost and could instead ask customers to pay in cash for larger purchases. The proposed MDR has become a major point of discussion among traders and shopkeepers in Ghaziabad, with many opposing the move. The traders’ notices are effectively a warning to customers that UPI may not be accepted for certain higher-value purchases once the proposed charge comes into effect. The charge will be paid by the merchant, not the customer. UPI payments between individuals will remain free. Most everyday UPI payments will also remain outside the new charge. The bigger change will be felt in higher-value merchant payments. Centre Wants Merchants To Absorb The UPI Fee
Traders are advising customers to carry cash when making purchases from October 15, particularly for transactions above Rs 2,000. UPI Fee: What Changes From October 15? Under the new framework, a 0.4 per cent MDR will apply to specified person-to-merchant UPI transactions above Rs 2,000. It will be capped at Rs 300 for transactions of Rs 75,000 and above. Person-to-merchant (P2M) transactions up to Rs 2,000 account for more than 95 per cent of P2M transaction volume and will continue to attract zero MDR. This means someone buying a Rs 1,500 item from a shop through UPI will not suddenly face a new UPI fee.
The government’s concern is simple. That could undermine one of the biggest advantages of digital payments. Banks have also been advised to ensure that merchants do not transfer the cost. The government has not, however, publicly detailed exactly how this daily monitoring will work. Will UPI Users Return To Cash? The government does not expect the new MDR to push people back towards cash. So the new MDR is primarily aimed at a relatively small portion of higher-value merchant transactions. RuPay debit card payments will also remain free irrespective of the transaction amount, giving merchants and consumers another digital payment option.
The Centre has, therefore, started discussions with payment aggregators and other platforms to ensure the MDR is not passed on to consumers. Because the overwhelming majority of UPI payments are small-value transactions, that is. Officials estimate that only around 4 per cent of UPI transaction volume will be affected by the new levy. NPCI data shows that in August, 86 per cent of P2M UPI transactions were below Rs 500 and another 10 per cent were between Rs 501 and Rs 2,000.
If merchants start adding a separate “UPI charge” to bills, customers could feel that UPI is no longer free.
