Madurai entrepreneur urges PM Modi to link proposed UPI MDR to merchant margins
JK Gokul Balaji says a proposed ₹300 UPI MDR cap could absorb 12% of profit on an ₹80,000 laptop sale, urging margin-linked pricing. The cited framework retains zero MDR for merchants receiving up to ₹1 lakh a month.
What happened
Madurai entrepreneur JK Gokul Balaji urged PM Modi to link new UPI MDR charges to merchant margins, arguing a ₹300 fee can consume 12% of profit on an ₹80,000
Key facts
- 0.4% MDR on UPI transactions above ₹2,000
- ₹300 MDR cap per transaction for payments of ₹75,000 and above
- ₹5 flat MDR for telecom, insurance and fuel
- 0.02% MDR for mutual fund and stockbroker payments, capped at ₹300
- Zero MDR for small merchants receiving up to ₹1 lakh monthly
- 5% of MDR collections allocated to a small-merchant UPI promotion fund
Why this matters
Payments providers and retail platforms have an opportunity to advocate for margin-linked MDR or develop merchant pricing tools that mitigate fee impact for high-value transactions.
What to watch
- Formal Finance Ministry, RBI, or NPCI consultation paper specifying MDR rate, merchant threshold, and effective date.
- Whether the ₹1 lakh monthly merchant-receipts exemption is measured per outlet, GSTIN, bank account, or legal entity.
- Retail association submissions citing category-level gross margins and high-ticket transaction economics.
- Any exemption or lower MDR for electronics, appliances, fuel, travel, government payments, or other strategically sensitive categories.
- Evidence of UPI transaction steering, reduced acceptance among larger merchants, or changes in UPI share for high-value retail purchases.
- Government clarification on who bears the cost: merchant, customer, acquiring bank, issuer, or public subsidy.
- Retail and electronics trade bodies will quantify MDR as a share of gross margin by category and lobby the Finance Ministry, NPCI, and RBI for margin-linked treatment.
- Large retailers may encourage lower-cost payment rails, steer customers toward cards with negotiated rates, bank transfers, EMI products, or selective cash discounts if MDR becomes material.
- Merchants near the ₹1 lakh monthly UPI-receipts threshold may split payment acceptance across entities, limit UPI collection, or alter settlement structures to preserve zero-MDR eligibility.
- Payment aggregators and fintechs may propose tiered merchant pricing, volume rebates, or bundled value-added services to soften merchant resistance.
- High-ticket retailers may reassess UPI acceptance policies for laptops, mobiles, appliances, jewellery, and other low-margin categories.