- The Retailers Association of India warned the 0.4% MDR may reverse digital payment gains
- RAI plans to discuss MDR concerns with Ministry of Finance and National Payments Corporation
- They propose a graded MDR structure separating debit-linked from credit-linked UPI transactions
The Retailers Association of India (RAI) said the 0.4% Merchant Discount Rate (MDR) could reverse gains made in digital payments space and encourage consumers to shift back to cash for transactions.
In a statement issued on Wednesday, the association shared its plan to take up the matter with Ministry of Finance and National Payments Corporation of India, urging for a graded structure that separates debit-linked from credit-linked UPI transactions.
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After nearly six years of free UPI payments, the government on Tuesday introduced a 0.4% fee on transactions worth more than Rs 2,000 made to merchants through the platform from October 15.
"Small merchants will now think twice about whether to accept cash or UPI," said RAI CEO Kumar Rajagopalan.
He further argued that the move to levy MDR goes against the government's own formalisation agenda and urged it to bear cost of normal UPI transactions.
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