D2C brands flag margin risk from proposed UPI merchant fees ahead of festive season
D2C brands including Hunnit say a proposed 0.4% UPI merchant discount rate, capped at ₹300 per transaction, could pressure margins as festive discounting and customer-acquisition costs rise. Brokers are seeking lower rates and caps, plus a higher MDR-free threshold.
What happened
Hunnit · Indian D2C brands warn proposed UPI merchant fees could squeeze margins during the festive season, when discounting and acquisition costs rise. Brokers
Key facts
- 0.4% proposed MDR
- ₹300 transaction cap
- 2-basis-point MDR sought by brokers
- ₹2–5 cap sought by brokers
- ₹2,000 current MDR-free threshold
What changed
Indian D2C brands warn proposed UPI merchant fees could squeeze margins during the festive season, when discounting and acquisition costs rise. Brokers including Groww, Zerodha and Angel One seek lower charges, lower caps and a higher MDR-free threshold.
Why this matters
Model the proposed 0.4% UPI MDR into festive-period unit economics, negotiate PSP rates and caps, and test checkout or pricing changes before margin pressure compounds with discounting and acquisition spend.
What to watch
- Final government, NPCI, RBI, or payments-regulator notification specifying MDR rate, transaction cap, merchant-size threshold, category exemptions, and effective date.
- Whether the MDR-free threshold is raised and whether small merchants, essential categories, or low-ticket transactions receive exemptions.
- Payment aggregators' revised merchant pricing, settlement terms, and any absorption of MDR for strategic accounts.
- UPI share of D2C checkout mix, average transaction value relative to the ₹300 cap, authorization success rates, and payment-method switching.
- Festive-season discount intensity, CAC inflation, return rates, and gross-margin guidance from D2C brands.