Retailers warn proposed UPI MDR could drive merchants and shoppers back to cash
The Retailers Association of India says a 0.4% merchant discount rate on UPI transactions above Rs 2,000 from Oct. 15 could hurt small merchants. It plans to seek a graded fee structure for debit- and credit-linked UPI payments.
What happened
Retailers Association of India (RAI) · Retailers Association of India warns that a 0.4% MDR on UPI merchant payments above Rs 2,000 could push small merchants
Key facts
- 0.4% Merchant Discount Rate
- transactions above Rs 2,000
- October 15
- nearly six years of free UPI payments
What changed
Retailers Association of India warns that a 0.4% MDR on UPI merchant payments above Rs 2,000 could push small merchants and consumers back to cash. It plans to seek a graded debit- and credit-linked UPI fee structure.
Why this matters
Model the proposed 0.4% UPI MDR on transactions above Rs 2,000 by store format and basket size, as it could compress small-merchant margins and prompt cash steering unless a graded structure is adopted.
What to watch
- Final NPCI, RBI, finance ministry, or government notification specifying applicability, merchant exemptions, and treatment of debit- versus credit-linked UPI.
- Retailers Association of India lobbying outcome and participation by large chains, payment aggregators, and merchant bodies.
- Changes in UPI transaction mix above Rs 2,000, average ticket size, cash withdrawals, and merchant acceptance rates after Oct. 15.
- Evidence of merchant steering: UPI minimum-purchase requirements, cash discounts, transaction splitting, or reduced QR-code acceptance.
- Acquirer and payment-aggregator announcements on MDR pass-through, subsidies, settlement terms, and merchant pricing.