Noida traders threaten to switch to cash over new UPI payment levy
Amid growing calls for the rollback of the latest government move concerning charges on some UPI payments, Noida traders have expressed strong concern over the new Merchant Discount Rate (MDR) framework, warning that the additional cost could squeeze already-thin profit margins and push some businesses towards cash transactions.
Several traders said they may either have to absorb the cost themselves or find ways to recover it from customers, despite the governmentβs direction that MDR should not be passed on to buyers.
Under the revised framework, effective October 15, merchants will pay an MDR of 0.4% on specified person-to-merchant (P2M) UPI transactions above Rs 2,000, subject to a maximum charge of Rs 300 per transaction.
Payments between individuals will remain free, while transactions up to Rs 2,000 and those covered under the zero-MDR framework for eligible small merchants will continue without the charge.
The government has clarified that MDR is a merchant-side fee and is not a tax collected by the government.TRADERS MAY REFUSE UPI PAYMENTS
Speaking to an India Today team in Noida, traders said the move could create difficulties for businesses that rely heavily on digital payments.
Vikas Jain, who deals in hardware and building materials, said business was already under pressure because of competition from online shopping and declining market footfall.
"Margins are already very low. If an additional cost is imposed on UPI payments, the question is whether the trader should bear it or recover it from the customer," Jain said.
He added that some shops had begun putting up notices encouraging cash payments and warning customers about a possible surcharge.
Another trader, Karan Grover, said UPI accounts for around 50-70% of his business payments. "When the margin itself is around five per cent, even a small additional cost matters. If traders have to bear MDR along with taxes and other expenses, it will put further pressure on the business," he said.
Grover said traders could increasingly encourage customers to pay in cash. However, if buyers refuse to bear any additional cost, merchants may ultimately have to absorb the expense.
Arif, who runs an interior-design business, said the dependence on online payments was even higher in his case, with around 90-95% of transactions taking place digitally.
"Very few customers pay in cash now. If digital payments become more expensive for merchants, it will directly affect us," he said, adding that the timing was particularly concerning with the festive season approaching.
The government, meanwhile, has said consumers will continue to use UPI without a transaction fee and that banks have been advised to ensure merchants do not recover MDR directly from customers.
Officials have also said the framework is aimed at creating a sustainable funding model for the digital-payments ecosystem.
The move has also triggered criticism from Opposition parties, which have called for its rollback, while the Centre has rejected allegations that the decision was taken under foreign pressure.
For traders in Noida, however, the immediate concern remains the impact on business costs.
With the October 15 implementation date approaching, merchants are watching how the MDR is enforced and whether the added expense changes customer payment preferences or business pricing.- EndsPublished By: Vivek Published On: Sep 17, 2026 23:50 IST
