Delhi merchants up in arms, say MDR on UPI could mark return to cash

New UPI charges on high-value merchant payments are raising concerns among Delhi retailers, with some considering a shift towards cash to protect margins

The imposition of a merchant discount rate (MDR) on select Unified Payments Interface (UPI) transactions has the retail trade in Delhi’s Lajpat Nagar Central Market on tenterhooks about the additional burden on them, with some saying they might have to resort to encouraging customers to pay in cash for big-ticket purchases.

Effective October 15, a 0.4 per cent MDR will apply on eligible person-to-merchant (P2M) UPI transactions above ₹2,000. The charge will be capped at ₹300 for transactions of ₹75,000 and above. Customers, however, have been given a reprieve from paying the MDR which means the burden will fall to merchants.

“I think the government has cheated us. UPI has been free since Covid, so why is the government charging us now? The burden should not be on us,” complained Deepak Nagpal, 43, a garments retailer in New Delhi's Lajpat Nagar, a major shopping hub.

UPI was free for merchants for over six years