MDR on UPI payments will push traders back to cash, warns Maharashtra Chamber

The Maharashtra Chamber of Commerce, Industry and Agriculture has issued a clear warning to the central government over the decision to levy Merchant Discount Rate, or MDR, on UPI payments above Rs 2,000. The chamber has asked the government to reconsider the decision, saying it could set back the campaign to promote digital payments. The move has caused concern among traders and industry across the country.

According to the chamber, UPI has become the backbone of India's digital economy in recent years, driving digital transactions from small shops to large businesses. But if MDR is levied on transactions above Rs 2,000, it will upset the finances of traders who operate on thin margins. The extra cost could make it difficult to run business, particularly for those in retail, services and distribution.

The chamber said traders already bear heavy costs on logistics, rent, tax and manpower. If the burden of MDR is added, traders will be left with only two options: pass the cost on to customers, or start preferring cash transactions over digital payments. This, it said, could harm the very purpose of Digital India. The chamber has demanded that the government not focus only on increasing revenue, but frame policy keeping in mind the interests of the country's millions of small and medium businesses and customers.

The Maharashtra Chamber also clarified that traders are not opposed to digital transactions, and are in fact contributing to the formalisation of the economy. It said the government, banks, the payments sector and trade bodies should together find a middle path. The chamber said this is the right time to frame a policy that balances the growth of UPI with the economic interests of traders.

Ravindra Mangave, president of the Maharashtra Chamber of Commerce, Industry and Agriculture, said, "This is not opposition to UPI, it is a question of additional financial burden. Digital transactions should increase, UPI should get stronger and India's digital economy should move forward. But the cost of this growth should not fall on the shoulders of the traders and entrepreneurs who are already carrying this responsibility. The government should reconsider this decision and chart a balanced path in the interest of industry, trade and the digital economy alike."