World · India Bureau
UPI Merchant Discount Rate Threatens Payment Adoption, Company Warns
A company director has cautioned that charges on Unified Payments Interface transactions could cost his business 12 million rupees, potentially forcing a retreat from accepting digital payments if profitability is affected.
LSN India ·
An Indian business leader has raised fresh concerns about the financial impact of merchant discount rates (MDR) on UPI transactions, warning that his company faces losses of approximately 1.2 crore rupees due to the charges.
The company's managing director stated that if the MDR charges continue to erode profit margins significantly, the business may be forced to limit or reduce acceptance of UPI payments—a move that could undermine India's push toward digital payment adoption.
The MDR on UPI payments has been a contentious issue among merchants and digital payment providers, who argue that the charges make accepting small-value digital transactions economically unviable. Smaller retailers and service providers have been particularly vocal about the burden the fees place on their operations.
The warning comes amid ongoing industry pressure on payment regulators to reconsider MDR structures on digital payment platforms. Various merchant associations have previously called for subsidies or fee reductions to encourage continued acceptance of digital payment methods across retail and services sectors.
The Reserve Bank of India and the National Payments Corporation of India have periodically reviewed MDR policies, but the rates remain a flashpoint between merchants seeking lower costs and payment service providers arguing for sustainable business models.