The central government is preparing to implement a 0.4% Merchant Discount Rate (MDR) on UPI transactions exceeding ₹2,000. This rule is slated to take effect on October 15th. However, even before the charge is implemented, its impact is already being felt among businesses.
Shopkeepers and traders are concerned about increased spending. This is particularly evident at petrol pumps. According to ground reports from Alwar, Rajasthan, posters urging customers to avoid UPI payments exceeding ₹2,000 have been put up at many petrol pumps.
Cash Payment Posters at Petrol Pumps
According to an India Today report, many petrol pumps and CNG stations in Alwar are now informing customers that cash payments are not accepted. Petrol pump operators say that while they have learned that the MDR process will be implemented from October, they have not yet received clear instructions regarding this. While UPI payments are currently accepted at many locations, customers are avoiding online payments exceeding ₹2,000. According to operators, there’s still a lot of confusion among people about the new rules, and they aren’t fully aware of them.
Customers Avoiding Payments Over ₹2,000
Some customers who came to fill petrol and diesel said they received conflicting information about UPI charges. This is why many are avoiding making payments of more than ₹2,000 at once. Some customers are sending large amounts in two or three instalments via UPI, while others prefer to pay in cash. This is leading to an increase in cash usage at petrol pumps, rather than digital payments.
People Said: This Could Affect the Common Man
Customers say that if businesses’ expenses increase, it could impact the common man in the long run. They believe that merchants will not bear the increased costs out of their own pockets, which could affect the prices of goods and services. Some have urged the government to reconsider this decision. They argue that clear information about the new charges should be provided in advance to avoid confusion between shopkeepers and customers.
How much MDR will be charged at petrol pumps?
According to the NPCI circular, the UPI MDR will only affect select merchants. According to the provided material, approximately 4% of merchants will be covered by this system, while 96% of small merchants will be excluded. A flat-rate model has been proposed for petrol pumps. Under this, a fixed MDR of ₹5 will be charged instead of 0.4% for UPI payments above ₹2,000. This means that payments for petrol and diesel of ₹10,000 or more will also be charged at ₹5. The objective of this model is to keep the cost of digital payments low for retail merchants.
