Pune: Traders in Pune and Pimpri Chinchwad are a worried lot following the Centre’s proposal that merchants pay a 0.4% charge on UPI payments exceeding Rs 2,000.Businesses in commercial areas like Pimpri Camp and Market Yard, among others, said they have moved largely to digital transactions and this fee could increase their overhead and squeeze their already-thin margins.Sachin Nivangune, state president of the Confederation of All India Traders, said margins in the grocery trade generally range between 2% and 13%, from which traders must meet expenses such as rent, salaries, taxes and other operational costs.Wasim Shaikh, who runs a mobile phone shop in Pimpri Camp, said most businesses in the area operate on a wholesale model and nearly every transaction exceeds Rs 2,000. “It would be unfair to charge us on every transaction,” he said, suggesting that some wholesale businesses, or those with discretionary pricing (such as garments), might pass the cost onto consumers.Under the Centre’s new MDR (merchant discount rate) proposal, sellers must pay 0.4% on every transaction above Rs 2,000, subject to a maximum charge of Rs 300 per transaction. For instance, a merchant receiving a Rs 50,000 payment would pay Rs 200 as MDR. UPI payments for essential services, such as rail ticket booking, insurance premiums and telecom, will attract a flat Rs 5 fee.While the govt has exempted businesses with an average monthly transaction volumes of less than Rs 1 lakh, traders said most businesses in Pune have higher volumes.Kedar Bidwai, who runs a clothing store in Hadapsar, said his products start around Rs 1,400 and nearly 80% of the transactions would be chargeable. “In such a situation, it may be better to shift to cash payments rather than pay for using UPI,” he said.Mohsin Shaikh, a further store owner in Kondhwa, says, “Almost all transactions at my shop exceed Rs 2,000, while my daily volume often crosses Rs 75,000. Considering that most consumers now prefer online payments, we could end up paying more than Rs 300 a day and around Rs 9,000 a month.”One section of the traders said increased UPI payments improved GST compliance and suggested moving back to cash in certain cases could affect this.“Imposing an additional charge on UPI transactions will put an extra burden on merchants. People may shift towards cash transactions to save money, which could also affect GST collections,” Rajendra Bathiya, president of the Poona Merchants Association, said.On the other hand, the fintech sector has welcomed the proposal, particularly the decision to leave peer-to-peer (P2P) transactions out of its ambit.“MDR keeps the zero-cost nature of UPI for consumers and protects small merchants, while introducing a targeted MDR for larger-value merchant transactions. It is being reintroduced selectively, rather than across the entire UPI ecosystem,” Rohit Taneja, CEO of Decentro, a fintech company, said.Dilip Modi, who founded Spice Money, suggested the govt should consider the interests of all stakeholders. “The focus should be on ensuring that the cost of transactions remains manageable for merchants, particularly small businesses operating on thin margins. A balanced MDR framework can help create sustainable economics for banks, payment providers and last-mile networks while ensuring costs do not become a barrier to digital payment adoption,” he said.
