Mumbai: Traders say the imposition of the government’s new levy Merchant Discount Rate (MDR) on UPI payments will inevitably force them to relay the burden of this tax to the ordinary consumer. Cash payments will increase and opacity will cloud transactions.They say an economy dealing with inflationary pressure of expensive fuel, low food production, shortages caused by war in West Asia and high GST will be unable to absorb yet another shock that comes from MDR on UPI payments.In fact, the Petrol Dealers Association has issued an ultimatum and deadline of October 15 after which its members may discontinue accepting UPI payments if their demands are not met. Association president Chetan Modi said, “Dealers adopted digital payments under the assurance of zero MDR. Penalising petrol pumps for driving digitisation makes operations unviable, leaving associations no choice but to demand an immediate, complete exemption or discontinue accepting UPI entirely.”Modi added, “We have undertaken 60% digitalisation on PM Narendra Modi’s initiative. Imposing transaction fees on high-value fuel purchases will completely erode wafer-thin dealer margins amid escalating overheads.”Traders and consumers alike were overcome by surprise at the new levy since the government had assured that UPI payments would not be taxed.Viren Shah, president of Federation of Retail Traders Welfare Association, said people would devise ways around the new levy by splitting transactions into smaller amounts, paying to personal accounts rather than merchant accounts, greater use of cash and underreporting business receipts. “Additional costs will ultimately be passed on to the consumer,” he said.Shah said, “We strongly oppose the finance ministry’s decision to introduce transaction charges on UPI payments, even if the levy appears small today. Why should the shopkeeper bear this additional burden? Retailers are already facing pressure from online competition and large organised players. Adding even a small transaction cost on every digital payment further eats into their meagre margins. What is small today could become higher tomorrow. UPI was promoted as a simple, secure and efficient digital payment system. If transaction charges are introduced, UPI could becoming a revenue-generator model for government like credit cards. UPI transactions should remain free.”A businessman from Navi Mumbai said, “The government must clarify what compulsions led to this turnaround. It must also specify what measures it is taking to curb its official expenses. Politicians live the royal life while people suffer. The Indian public continues to bear costs of GST and the war in West Asia. There was no need to rock the boat by another inflationary step. Once again Gen Z may take to the streets — to oppose this levy.”Nilesh Veera, who heads the grain market in APMC Vashi, said, “The new UPI charge is required for monetisation [revenue generation] but the minimum threshold ought to be increased from Rs 2,000 to Rs 15,000. This will help small traders and households.”APMC sugar market leader Mukesh Kuwadia justified the levy saying, “I am no expert, but I feel 96% transactions are below Rs 2,000 so it is no problem for anyone. Also banks and platforms need money to upgrade security.”Social media users voiced feelings of “betrayal by the government” and warned of further price rise due to this tax.An X user wrote, “The merchant cannot charge two different prices for those who are paying in cash or by UPI. He will anyway increase the price of his products. So, those who are paying in cash, will have to pay that extra amount unnecessarily. Extra profit for that merchant.”
