The introduction of merchant discount rate (MDR) on select UPI payments has drawn mixed reactions from businesses, with retailers raising concerns over margins while quick-commerce and e-commerce companies expect limited impact. The All India Consumer Products Distributors Federation (AICPDF) has urged the Centre to retain a zero-MDR mechanism for small retailers and MSMEs and called for a higher threshold to reflect the growing scale of small businesses. The National Payments Corporation of India (NPCI) has notified a 0.4 per cent MDR on person-to-merchant (P2M) UPI transactions above Rs 2,000, capped at Rs 300, while peer-to-peer payments and transactions involving small P2PM merchants remain free. P2PM merchants are defined as small vendors receiving up to Rs 1 lakh per month. In the capital markets, NPCI has set an MDR of 0.02 per cent, capped at Rs 300, for transactions involving mutual funds, securities, stockbrokers, dealers and related payments. NSE Managing Director and CEO Ashish Chauhan said the change could affect trading volumes through UPI in the short term, though the impact may stabilise over time. Meanwhile, quick-commerce and e-commerce businesses expect little disruption, with industry analyst Satish Meena noting that most quick-commerce transactions are below Rs 600 and larger purchases often use cards or other payment methods. A Zepto executive said less than 5 per cent of the company’s monthly transactions exceed Rs 2,000. Amazon Pay also said the framework preserves zero-MDR treatment for small-value transactions, noting that payments up to Rs 2,000 account for more than 95 per cent of UPI P2M volume.
Retailers Raise Concerns Over New UPI MDR, Quick-Commerce Firms Unfazed
