Ahmedabad: The Union govt’s decision to introduce a 0.4% merchant discount rate (MDR) on specified UPI payments above Rs 2,000 from Oct 15 has triggered concern among Gujarat-based traders, who fear the additional cost could eventually be passed on to consumers.
Imposing charges on UPI transactions above Rs 2,000 is unfair. If someone buys an electronic item worth Rs 75,000 through UPI, the trader will face a charge of Rs 300 and will increase the selling price accordingly. As a result, ticket sizes could end up being higher.
A fee on high-value UPI transactions could eventually raise prices for consumers, traders across sectors said, with the impact likely to be sharper on large-ticket purchases. Traders, however, said the impact would depend on the transaction’s size and nature. Meghraj Dodwani, president of Shree Ahmedabad Vepari Mahasangathan, said, “Traders would ultimately have to factor the additional cost into prices. Traders said consumers would also have alternatives. Dilip Thakkar, a restaurateur, said businesses were not looking to pass the cost on to customers immediately. Traders said they would initially look for ways to absorb the charge, but the calculation could change for larger transactions where the payment cost becomes significant. Rakesh Kumar, a tea vendor near SG Road, said, “I accept UPI payments as hardly any customer pays in cash now.
The charge will be borne by merchants rather than customers. large-ticket transactions could make the additional expense harder to absorb While businesses may absorb the cost on smaller purchases for now. It will cause heavy losses for traders, who will ultimately pass the burden on to customers. Cash transactions could rise, while customers making larger purchases could shift to credit cards. However, the extent of the shift is likely to vary across sectors. The impact will not be limited to high-value traders, but will also reach small vendors who have widely adopted UPI. Our regular customers often clear bills once or twice a month. We will now have to ask customers to either pay in cash or pay a lower ticket size. Small vendors like us cannot afford to pay charges. ”
