Trade associations across major Delhi markets—including Kamla Nagar, Khan Market, and Sadar Bazar—have announced plans to encourage cash payments in response to the newly introduced Merchant Discount Rate (MDR) framework on UPI transactions.
Key Concerns From Trade Bodies
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The 0.4% Fee Trigger: The new framework sets a baseline 0.4% MDR on person-to-merchant (P2M) UPI transactions exceeding Rs 2,000, effectively ending the zero-MDR regime in place since January 2020. High-value payments over Rs 75,000 will have the charge capped at Rs 300.
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Margin Pressures: Trader representatives argue that operating on already tight profit margins makes absorbing transaction costs difficult, especially alongside existing GST and business overheads.
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No Passing on to Consumers: Official guidelines explicitly prohibit merchants from passing the MDR charge directly to customers or inflating retail shelf prices, leaving vendors feeling that the financial burden falls squarely on them.
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Shift to Cash and Alternate Channels: Expressing frustration after years of adopting and promoting digital payments, association leaders stated they will actively steer customers toward cash and utilize traditional banking channels like cheques for wholesale transactions to bypass the new fees.
While small merchants earning under Rs 1 lakh monthly via QR codes remain exempt, medium and large-scale retailers warn that the new fees could drive a noticeable reversion toward physical currency use ahead of the festive season.
