Retailers, Clothing Industry Raise Concerns Over 0.4% MDR On UPI Payments Above Rs 2,000

New Delhi, Sep 17 (KNN) The Retailers Association of India (RAI) and Clothing Manufacturers Association of India (CMAI) have raised concerns over the reintroduction of a 0.4 per cent Merchant Discount Rate (MDR) on UPI person-to-merchant transactions above Rs 2,000, ahead of the festival season.

The MDR will be capped at Rs 300 for transactions of Rs 75,000 and above. RAI said it will take up the issue with the National Payments Corporation of India (NPCI) and the Ministry of Finance.

RAI Seeks Graded MDR Structure

RAI has called for a graded framework that distinguishes between debit-linked and credit-linked UPI transactions and pairs any merchant charge with incentives to encourage small retailers to continue accepting digital payments.

RAI CEO Kumar Rajagopalan said the charge could encourage smaller merchants to shift towards cash, particularly during the festive season when transaction values tend to rise, reported Businessline.

“UPI acceptance should be incentivised, not taxed,” Rajagopalan said, arguing that charges are more defensible where UPI is linked to a credit line because of the underlying cost structure.

He also said the government should bear the cost of regular UPI transactions, pointing to the GST revenue and greater transaction traceability generated by digital payments.

CMAI Flags Margin Pressure

CMAI President Santosh Katariya said the move comes at a critical time for merchants and consumer-facing businesses seeking to revive demand and improve margins.

“Adding another cost to digital transactions at this juncture risks putting further pressure on an ecosystem that is still finding its footing,” he said.

RAI also warned that shifting transactions back to cash could undermine efforts to promote formalisation and digital payment adoption among small retailers.

(KNN Bureau)