12 hrs ago
UPI Fee Plan Sparks Fears of Cash’s Return
The Centre plans to charge merchants a small fee on some UPI payments above Rs 2,000.
The fee is planned for person-to-merchant payments from October 15.
Some people think it could help users think more carefully about spending.
Merchants worry that customers may start using cash again.
A sari seller said businesses might raise prices to cover the fee.
Others fear that future charges could affect small shops or person-to-person payments.
The government says the fee would apply to merchants, not customers.
Critics worry that merchants may still pass the cost on to customers.
The Centre plans to levy a 0.4% merchant discount rate on person-to-merchant UPI transactions above Rs 2,000 from October 15.
Some Hyderabad residents said the fee could encourage more mindful spending and money tracking.
Merchants warned that customers may return to cash or face higher prices.
Critics feared the fee could spread to smaller businesses and eventually affect person-to-person payments.
Former finance minister P. Chidambaram said merchants might pass the charge to customers, as happens with some credit-card payments.
- Who
- The Centre, Hyderabad residents, merchants, and former finance minister P. Chidambaram.
- What
- A 0.4% merchant discount rate is planned for person-to-merchant UPI transactions above Rs 2,000.
- Where
- Hyderabad and Secunderabad, with implications discussed for businesses more broadly.
- When
- From October 15; the year is not specified in the article.
- Why
- The Centre has decided to levy the merchant discount rate on qualifying UPI transactions; the article does not state a further rationale.
Supporters and Cautious Optimists
Merchants and Critics
Effect on spending
Supporters and Cautious Optimists
The fee could make people more mindful of UPI use, track their money, and spend more responsibly.
Merchants and Critics
The change could discourage digital payments and push people back toward cash.
Impact on merchants
Supporters and Cautious Optimists
Keeping charges limited and transparent could preserve the convenience of digital payments.
Merchants and Critics
Merchants may have to absorb the cost or increase prices, particularly for higher-value transactions.
Future expansion
Supporters and Cautious Optimists
The announced measure applies to merchants and transactions above Rs 2,000, rather than customer or person-to-person payments.
Merchants and Critics
Some people fear future fees could reach person-to-person payments and small businesses, while P. Chidambaram warned merchants may pass charges to customers.
Key facts
- Fee rate
- 0.4%
- Affected payments
- Person-to-merchant UPI transactions
- Transaction threshold
- Above Rs 2,000
- Start date
- October 15
- Who is charged
- Merchants, according to the government’s position
- Main concern
- Merchants may pass the cost to customers or encourage a return to cash
- Merchant example
- Some sari payments can range from Rs 1 lakh to Rs 2 lakh
Quotes
Samuel Abhishek
An IT professional expressing concern that UPI fees will revive cash use.
“All these days, we were encouraged to use UPI and got habituated, but now, it will become difficult. We get payments of Rs 1-2 lakh for sarees, and using cash could also encourage black money transactions. If charges are imposed, I may have to increase the prices of sarees to cover the additional cost.”
deccanchronicle.com
“Though the government says the fees are only applied to the merchant and not customers, we know how most merchants in India charge customers the 2% fee for credit cards today. I fear the same happens to UPI as well when MDR is charged to merchants.”
deccanchronicle.com
Sources
Related news
UPI Merchant Charges Begin October 15 for Higher-Value Payments
UPI Sets 0.4% MDR on High-Value Merchant Payments
India Adds UPI Merchant Fees Above ₹2,000
New UPI MDR Rules Keep Consumers Free, Charge Eligible Merchants
Ashneer Grover Warns UPI Charges Could Revive India’s Cash Economy
UPI MDR Above ₹2,000 May Begin Within Two Weeks
BRICS Declaration Highlights India’s Diplomatic Leadership Amid Opposition Questions
Chidambaram Questions Whether GDP Growth Benefits Indians
BJP Uses BRICS Summit to Promote Modi’s Global Influence
Congress Leaders Offer Contrasting Views on BRICS Influence
