People Fear UPI Fee Will Bring Cash Back

Hyderabad:The Centre’s decision to levy a merchant discount rate (MDR) of 0.4 per cent on person-to-merchant UPI transactions above Rs 2,000 from October 15 has evoked mixed response from Hyderabadis, with some people saying that it will keep people mindful while using UPI. Merchants felt that people might go back to cash transactions.

Karthik, a student, said this is good. However, in the future, the government may levy MDR fees for person-to-person transactions or small merchants like vegetable vendors, small restaurants, etc. “If fees are introduced later, the younger generation may hesitate to start small businesses, thinking that a part of their profits will go to the government,” he said.

A chartered accountant, Manisha Dubey, said usually credit card transactions are not charged for the customer, but the merchant who is getting the payment via the credit card would have to pay the charges. “So similar are new rules, which might affect businesspersons. So, merchants might transfer the burden to the customer,” she said.

A Secunderabad resident, Sunaina K, felt that the change could make people more mindful about using UPI for payment. “Charges should remain limited and transparent so that digital payments continue to be convenient. Overall, I consider it as a balanced step that could encourage people to track their money and spend more responsibly,” she said.

Jakkoju Shiva, a sari merchant, said that customers will have to start using cash again. “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,” he added.

Samuel Abhishek, an IT professional, shared: “This step will only force many of us to move back to cash transactions — already many small businesses aren’t accepting UPI or card transactions in remote places. With this, the UPI fear will spread to sub-urban and urban areas too.”

Comment on the announcement, former finance minister P. Chidambaram said, “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.”