The new Merchant Discount Rate (MDR) on select high-value UPI transactions has already triggered resistance among traders in Ghaziabad, with several shopkeepers putting up notices warning customers that UPI payments will not be accepted from October 15.
The posters, carrying messages such as “UPI Payment Will Not Be Accepted”, have appeared at shops in different parts of the city as traders object to the proposed 0.4 per cent MDR on eligible person-to-merchant payments above Rs 2,000. Traders say that while the charge is officially to be borne by merchants, the additional expense could put further pressure on businesses operating on narrow margins.
The new framework is scheduled to take effect on October 15. The MDR will apply to designated merchant transactions, while person-to-person UPI transfers will remain free. The charge is capped at Rs 300 for transactions of Rs 75,000 and above.
No UPI From October
Several traders are advising customers to carry cash for purchases above Rs 2,000 once the new framework comes into force.
The notices reflect growing concern that merchants may choose to stop accepting UPI for larger purchases rather than absorb the additional payment cost. Reports from Ghaziabad indicate that shops in areas including Crossings Republic, Vijay Nagar and Pratap Vihar have displayed similar warnings.
Akshay Kumar Gupta, who runs Vaishvi Jewellers in Crossings Republic, said the nature of his business means most purchases are above the threshold and argued that the change could create difficulties for customers.
Traders have also raised concerns about whether businesses will eventually factor the additional cost into their prices, even though the government has said the MDR should not be passed on separately to customers.
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How MDR Works
Under the new system, a 0.4 per cent MDR will apply to specified person-to-merchant UPI payments exceeding Rs 2,000. A transaction of Rs 10,000, for instance, would attract an MDR of Rs 40, while the maximum charge would be Rs 300 for transactions of Rs 75,000 or more.
The fee is to be borne within the merchant payment ecosystem rather than charged directly to customers. Person-to-person UPI transactions will not attract the MDR.
The framework also includes different rates for certain sectors and transaction categories, meaning the 0.4 per cent rate does not apply uniformly to every UPI payment above Rs 2,000.
Traders Fear Margin Pressure
For traders, the concern is not limited to the amount deducted from an individual transaction. They say repeated MDR deductions could become significant for businesses that process a large number of high-value digital payments.
Gupta said the change could affect traders already working with tight margins, particularly in a competitive market.
“We are already operating on a shrinking margin, and it’s a highly competitive market. We cannot simply keep absorbing additional costs when margins are under pressure. UPI became popular because it made payments convenient,” he added.
Shahnaz, who runs a beauty parlour in the area, has also displayed a cash-only notice in response to the proposed change.
Traders say they had invested in QR-code payment systems as digital payments expanded and fear that a return to cash for larger purchases could undermine some of the convenience created by widespread UPI adoption.
Congress Stages Protest
The issue has also acquired a political dimension in Ghaziabad.
The district and city Congress units held a symbolic demonstration outside the residence of BJP MP Atul Garg, opposing the proposed MDR. Party workers presented puja items and fruits worth more than Rs 2,000 as a “return gift” to mark Prime Minister Narendra Modi’s birthday.
District Congress president Satish Sharma said the government should address the concerns raised by traders over the additional cost of digital transactions.
City Congress president Veer Singh Jatav also called for discussions with the trading community, arguing that digital payments should remain accessible without placing an additional burden on merchants.
The government, meanwhile, has maintained that the MDR is a merchant-side charge and that customers should not be made to pay it separately. The new framework is set to begin on October 15.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: abplive.com
