Retailers warn UPI MDR could lift prices and trim festive discounts
Retailers Association of India and Clothing Manufacturers Association of India say a 0.4% MDR on UPI payments above ₹2,000 could raise operating costs, potentially pushing up prices or reducing festive-season discounts. The fee is due to take effect on October 15, with MDR capped at ₹300 for transactions of ₹75,000 and above.
What happened
Retailers Association of India (RAI) · Indian retailers and apparel makers warn that a 0.4% MDR on UPI merchant payments above ₹2,000 may lead to price
Key facts
- 0.4% MDR
- UPI transactions above ₹2,000
- Effective October 15
- MDR capped at ₹300
- Cap applies to transactions of ₹75,000 and above
What changed
Indian retailers and apparel makers warn that a 0.4% MDR on UPI merchant payments above ₹2,000 may lead to price increases or lower festive discounts, despite rules barring direct surcharge pass-through to consumers.
Why this matters
The October 15 UPI MDR proposal is a modest but broad-based margin headwind for retail and apparel companies, with greater exposure for high-volume, low-margin merchants and discount-led formats.
What to watch
- Formal notification details before October 15, including merchant categories covered, exclusions, enforcement rules and whether the ₹2,000 threshold applies per transaction or per order.
- Government, NPCI, RBI or finance ministry clarification on whether merchants may offer payment-method-specific discounts despite restrictions on direct pass-through.
- Announcements from major acquirers, payment aggregators and UPI apps on merchant pricing, rebates, or absorption programs.
- Festive-season UPI mix for transactions above ₹2,000, checkout conversion rates and average discount depth versus card and cash-on-delivery orders.
- Retailer association lobbying outcomes and whether large chains publicly alter festive offers or payment incentives.