Bengaluru-based entrepreneur Siddharth Dialani said as much in an X post shared yesterday. The Centre’s decision to impose a merchant discount rate (MDR) on UPI payments above ₹ 2,000 made to merchants has sparked a heated debate online. On social media, thousands of people have raised concerns that the MDR would eventually be passed on to customers, increasing the cost of everyday purchases.
MDR is a small fee that merchants pay to banks and payment companies each time a customer makes a digital payment. In reality, many merchants pass on MDR to customers. UPI had been exempt from MDR since 2020, a policy choice meant to push India away from cash and towards digital payments.
However, now, a “nominal MDR of 0.4% will be levied on P2M transactions above ₹ 2,000”, says the government notification. warning that imposing merchant costs onto consumers is illegal and a criminal offence, the Congress-led Opposition has termed the move a “betrayal” and a “UPI tax,” alleging that the Modi administration has capitulated to American pressure to benefit foreign payment corporations While the Central government maintains that digital payments remain entirely free for citizens. Reassuring consumers amid raging debates over digital transaction charges, Union Minister for Communications Jyotiraditya M Scindia on Wednesday made it clear that any attempt by merchants to impose the costs of the Merchant Discount Rate (MDR) on transactions done through Unified Payments Interface (UPI) to customers would violate the law and constitute a criminal offence.
Instead, restaurants did not give discounts to Zomato and Swiggy, forcing the food aggregators to earn money from customers by introducing unnecessary fees.
“When Swiggy and Zomato started food delivery, they expected restaurants to give them discounts as (1) they brought more business to restaurants (2) those online orders didn’t need tables, air conditioning, waiters, etc,” the Bengaluru-based founder said. Dialani said the same thing would happen with UPI.
