Apparel and retail bodies oppose proposed UPI MDR ahead of festive season
The Retailers Association of India and Clothing Manufacturers Association of India warn that a proposed 0.4% MDR on UPI merchant payments above ₹2,000 could compress margins, revive cash use and hinder formalisation during peak festive demand.
What happened
Retailers Association of India (RAI) · Indian apparel and retail bodies oppose the proposed UPI MDR, warning it will squeeze merchant margins, encourage cash
Key facts
- 0.4% MDR on person-to-merchant UPI transactions above Rs 2,000
- MDR capped at Rs 300 for transactions of Rs 75,000 and above
What changed
Indian apparel and retail bodies oppose the proposed UPI MDR, warning it will squeeze merchant margins, encourage cash payments and weaken formalisation during the festive season. They seek differentiated treatment for debit- and credit-linked UPI transactions.
Why this matters
A UPI MDR above ₹2,000 would create a modest but broad margin headwind for high-ticket apparel and retail merchants, with the greatest risk to low-margin chains lacking pricing power.
What to watch
- Formal Finance Ministry, RBI or NPCI consultation paper specifying whether the proposed fee applies to all UPI rails or only credit-linked/high-value transactions.
- Clarification of the ₹2,000 threshold, merchant-category exemptions, interchange allocation and whether fees can be passed through to consumers.
- Government response to the requested ₹300 cap for transactions of ₹75,000 and above.
- Festive-season UPI transaction-volume and average-ticket trends, especially in apparel, electronics, jewellery and department stores.
- Any rise in cash-on-delivery, cash-at-store, card usage or transaction-splitting behavior following merchant communications.