‘May have to go back to cash’: Traders on UPI MDR

NEW DELHI: “We may have to go back to cash” – this is the refrain at Delhi’s markets after Centre introduced a 0.4% merchant discount rate (MDR) on UPI transactions above Rs 2,000.Traders and shopkeepers said they may stop accepting digital payments for larger transactions if they have to bear the additional cost.For businesses that have spent years shifting customers from cash to UPI, the move has come as a setback. They questioned why they should bear another transaction-related cost after paying GST and other business expenses. Some, they said, may now encourage customers to pay in cash.“We were already paying transaction charges and 18% GST. Now if govt charges us on UPI MDR, then we will promote cash. When govt came with the UPI payment method, we supported it. We are already grappling with issues like freezing of bank accounts and the imposition of restrictions due to complaints regarding cyber fraud. In such a climate, any additional increase in the cost of accepting digital payments is a cause for concern for small and medium-sized traders,” said Kamla Nagar Market Association president Nitin Gupta.“We have got used to digital payments. Sometimes, when we go to the market, we don’t even carry cash. It will be tough for us to go back to cash payments,” he added.Govt announced the charge Tuesday as part of a framework for large digital merchant payments, ending the zero-MDR regime that has been in place since Jan 2020.Traders and shop owners in several markets, including Kalkaji, Kamla Nagar, Khan Market, Laxmi Nagar and Sadar Bazar, said the decision has created confusion over who will bear the additional cost.They said even if the charge is not directly recovered from customers, it would add to the cost of doing business and could squeeze already limited margins.At Shree Shyam Jewellers in Kalkaji’s Block A, a shopkeeper said, “There is already so much confusion. After paying taxes, 18% GST and meeting so many other business expenses, an additional transaction charge is simply unacceptable. It will put another burden on us. We cannot keep absorbing costs,” he said.Brijesh Goel, chairperson of Chamber of Trade and Industry, said the move could encourage a shift towards cash transactions.“In the past six years, we have with great difficulty brought even the smallest of shopkeepers and street vendors onto UPI. Today, 90% of payments in Sadar Bazar, Chandni Chowk, Lajpat Nagar, Chawri Bazar, Kamla Nagar, Karol Bagh and Gandhi Nagar are through UPI. If MDR is imposed, it will be a setback to the Digital India mission,” he said.New Delhi Traders Association general secretary Amit Gupta said traders had no objection to digital payments but are opposed to the additional cost.“UPI was introduced to make digital payments easier for both traders and customers. If traders are now asked to bear an additional charge on transactions above Rs 2,000, many of them will prefer cash payment,” he said.Sadar Bazar Bari Market Traders Association president Paramjit Singh Pamma said the impact could be significant for businesses handling hundreds of large UPI transactions.“Profit margins are already limited, especially for small and medium-sized merchants. If merchants are charged for every large digital payment, it will directly impact their savings and profits,” Pamma said.The framework provides an exemption for small merchants earning up to Rs 1 lakh a month through UPI QR codes, with govt saying this covers 96% of merchant transactions.The MDR cannot be passed on to customers, while person-to-person UPI transfers remain outside the charge.Essential sectors such as railways, telecom and fuel will attract a flat Rs 5 fee per transaction, while capital market transactions will have a 0.02% rate.Petrol pump dealers, meanwhile, said they were waiting for clarity from the ministry of petroleum before deciding how to respond.You Can Also Check: Gold Rate in Delhi | Silver Rate in Delhi | Bank Holidays in Delhi | Public Holidays in Delhi | Delhi AQI | Weather in Delhi | Petrol Price in Delhi | Diesel Price in Delhi | CNG Price in Delhi | LPG Price in DelhiStay updated with the latest Delhi news. Download the TOI App.