FMCG distributors push to retain zero MDR on UPI payments
The All India Consumer Products Distributors Federation has urged the government to keep UPI merchant discount rates at zero, arguing that a proposed 0.4% levy would squeeze already thin FMCG retail and distribution margins. The group also sought B2B exemptions, GST relief and clarity on the ₹1 lakh monthly receipt threshold.
What happened
AICPDF urged the government to retain zero MDR on UPI, warning a proposed 0.4% charge would hurt thin-margin FMCG retailers and distributors. It sought B2B payment exemptions, GST relief and clarity on the ₹1 lakh monthly receipt threshold.
Key facts
- ₹328 lakh crore UPI transaction value
- ₹20,700 crore estimated UPI ecosystem operating cost
- 0.06% estimated aggregate cost of transaction value
- 0.4% proposed MDR
- ₹1 lakh monthly UPI receipt threshold
Why this matters
Any MDR change could increase demand for low-cost payment infrastructure, B2B settlement solutions and distributor-finance partnerships across FMCG channels.
What to watch
- Finance Ministry, RBI, NPCI or Ministry of Electronics and IT consultation language on UPI MDR, interchange or subsidy funding.
- Whether any policy distinguishes person-to-merchant transactions from B2B collections, and the exact treatment of the ₹1 lakh monthly receipt threshold.
- Union Budget or supplementary funding for UPI incentive/subsidy programs.
- Statements from major FMCG companies, distributor associations and merchant bodies on passing through payment costs.
- Evidence of distributors limiting UPI acceptance for invoice settlement or imposing minimum transaction sizes for UPI payments.
- GST clarification on whether any MDR or levy can be treated as an input tax credit or deductible business expense.
- AICPDF and allied trade bodies intensify lobbying for B2B carve-outs, GST offset treatment and a higher or clearer receipt threshold.
- Large FMCG distributors quantify UPI acceptance costs by outlet, transaction size and category, then prepare supplier and retailer cost-sharing proposals.
- Distributors encourage NEFT, RTGS, account-to-account bank transfers or credit-based settlement for larger invoices if UPI becomes chargeable.
- FMCG brands face requests to fund payment costs through higher distributor margins, revised trade schemes or faster settlement incentives.
- Payment aggregators and banks market lower-cost enterprise collection products, while lobbying for differentiated MDR rather than a uniform rate.