UPI Charges Fear Grips Delhi Markets: Will MDR Push Connaught Place, Khan Market Back To Cash?

Nemish Hemant, New Delhi: The Merchant Discount Rate (MDR) charges on UPI is threatening Delhi's popular markets, especially those like Connaught Place and Khan Market, where more than 50 to 60 per cent of UPI payment trends involve amounts above Rs 2,000.

According to shopkeepers, this would be like returning to the days of credit cards, where shopkeepers would ask customers before generating a bill whether they wanted to pay in cash or via UPI. If it was UPI, the applicable fee would be added to the bill. Discussion and apprehension regarding MDR has increased in the wholesale and retail markets of Delhi.

Everyone from customers to shopkeepers are trying to gather information about this. At present, uncertainty reigns. However, a government notification states that MDR will not be charged on payments up to Rs 2,000.

While similar assurances exist for payments above that limit, there's no clarity. Experts believe that by setting the MDR limit, the government has paved the way for imposing fees on transactions exceeding Rs 2000.

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Vikram Badhwar, general secretary of the New Delhi Traders Association (NDTA), an organisation of shopkeepers in Connaught Place, said that before 2020, there was a lot of talk in the outlets that payment was made in cash and by card.

When card payments were made, the MDR was added to the bill. Now, that situation is likely to return. The worry is that this will lead to a return to cash payments. Because shopkeepers will not want to bear this fee themselves, as their profit is only a few per cent.

He further explains that at the Connaught Place outlets, UPI accounts for over 50 per cent of payments over 2,000.

Shopkeepers in Khan Market express this concern, claiming that 80 per cent of payments are through UPI, with 55 per cent involving amounts over Rs 2,000. Sanjeev Mehra, president of the Khan Market Traders Association, said, "We were hoping to eliminate fees for card payments. Now, UPI itself is in the crosshairs."

He further said that UPI is a branding and success story for the government, and it is now being integrated with many countries. Therefore, it would be beneficial if the government itself bears the cost of approximately Rs 20,000 crore for its maintenance and security.

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Concerns Rise In Textile Markets Too

Concerns have also emerged from the famous Chandni Chowk textile market. According to Gopal Garg, head of the cloth market, UPI payments are high in wholesale markets. Therefore, this should be reconsidered.

Brijesh Goyal, chairman of the Chamber of Trade and Industry (CTI), voiced his opposition, said, "We oppose any such decision. The government is saying that the fee will be collected from the shopkeeper, not the customer, but the reality is that the shopkeeper will simply charge the same fee to the customer."

If a shopkeeper has to pay even one per cent MDR on a purchase of goods worth Rs 2,000, he will lose Rs 20. He will either charge the customer or make the goods more expensive.