New Delhi: Noida businesses are preparing for a new Merchant Discount Rate (MDR) on eligible UPI payments above ₹2,000, with traders divided over its impact but several saying they will absorb the additional cost rather than pass it on to customers.
From October 15, a 0.4% MDR will apply to person-to-merchant UPI transactions above ₹2,000. The charge will be borne by merchants and will be capped at ₹300 for transactions of ₹75,000 or more. Person-to-person UPI transfers will remain free, while merchant payments of up to ₹2,000 will also continue without the new charge.
For electronic goods sellers, the additional cost is being viewed as another pressure on already competitive margins. Harpreet Kohli, who runs Kay Dee Electronics, said his business would absorb the charge instead of transferring it to customers.
“We will not pass it on to the customer. We will absorb it,” Kohli said, pointing out that merchants already pay MDR on several other payment methods.
Harish Gupta, who runs Ankur Electricals in Sector 18, said his store already incurs MDR costs of around 0.85% to 1.2% on credit cards, debit cards and other digital payment options.
Gupta said UPI had significantly changed the way his business received payments, but the new charge could put additional pressure on margins. However, intense competition from online retailers makes it difficult for physical stores to add the cost to customer bills.
At Nithari Fish Market in Sector 31, sellers expressed similar concerns. Fish trader Gautam Haldar said even a small charge could affect margins in a business where individual transactions are often modest.
Haldar said he may remove some UPI QR codes and request customers to pay in cash. However, he acknowledged that many customers no longer carry cash regularly.
Kirana store owner Ajit Sarkar said the impact would be limited because many of his transactions are below ₹2,000. However, he noted that the accumulated cost from higher-value transactions could still reduce overall profit margins.
For many small businesses, the new MDR therefore presents a choice between absorbing the cost, encouraging cash payments or accepting some pressure on margins, while keeping UPI available to customers.
