UPI payment will be expensive! What will be the impact on your pocket if MDR is implemented?

Paying through UPI has become a habit for crores of people today. But now there is a strong discussion about imposing MDR i.e. Merchant Discount Rate on UPI transactions. Experts say that the real question is not how the payment companies will earn, but who will bear the expenses of MDR. If this burden falls on merchants, it may also impact customers, small businesses and the increasing use of digital payments.

MDR on UPI is the fee that is charged from merchants for processing digital payments. It is believed that banks and payment companies will not bear the entire expense themselves. In such a situation, this additional cost may fall directly on the traders. Experts say that initially many traders can bear this expense themselves, but it will not be easy to do so in the long run.

What will be the impact on customers?

This may reduce the discounts and offers available to customers. Many businessmen may also increase the prices of goods and services to compensate for their increased expenses. The biggest impact is expected to be on small traders, grocery shops and those businessmen who have rapidly adopted UPI in recent years. Many small merchants may avoid taking digital payments due to imposition of MDR even on low value transactions.

If merchants reduce taking payments through UPI or start charging extra from customers, people’s enthusiasm to use digital payments may also decrease. This may affect the pace of adoption of digital payments in the country. Experts say that UPI is not just a payment system but a big digital public infrastructure of India. Therefore, it is necessary to find such a solution, which will provide investment opportunity to banks and payment companies, but does not put additional burden on traders and customers.

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