UPI merchant-fee proposal flags risk of added costs for small retailers
A BusinessLine reader argues that a proposed UPI merchant discount rate, scheduled from October 15, could squeeze thin-margin merchants and prompt surcharges, higher prices or reduced acceptance of UPI payments.
What happened
A reader warns that the proposed UPI merchant discount rate could pressure thin-margin merchants to raise prices, add hidden charges, or discourage UPI payments
Key facts
- September 25
- October 15
Why this matters
The proposal could increase demand for low-cost payment routing, merchant acquiring, and value-added fintech solutions, though regulatory timing and final fee structure remain uncertain.
What to watch
- Formal government, NPCI, RBI, or finance-ministry notification specifying the October 15 effective date and covered transaction types.
- Whether the proposed charge is paid by merchants, banks, payment apps, or subsidized by the government.
- MDR rate caps, merchant turnover thresholds, transaction-value exemptions, and exclusions for small businesses.
- Major payment apps and QR-acquirer communications on revised merchant pricing.
- Evidence of UPI QR deactivation, cash-discount signage, minimum-purchase rules, or customer migration to cash at kirana and micro-retail stores.
- Consumer complaints or political pushback over visible UPI surcharges and retail price increases.
- Model UPI acceptance cost by store format, average ticket size, payment mix, and gross-margin band.
- Prepare customer-facing cash or bank-transfer discount policies that comply with applicable pricing and consumer rules.
- Review payment-service-provider contracts for fee pass-through, settlement charges, device rentals, and bundled service costs.
- Expand alternative low-cost acceptance options, including bank-transfer rails and negotiated acquiring arrangements for higher-volume locations.
- Train store teams on consistent handling of UPI-payment minimums or surcharges if policy changes are permitted and adopted.