Ashneer Grover criticizes the implementation of merchant fees on UPI transactions, arguing they will ultimately cost consumers.
Reader brief
Through the Reader lens: The Indian government is proposing a 0.4% merchant discount rate (MDR) on UPI transactions exceeding ₹2,000, sparking immediate backlash from business leaders and trade groups. Ashneer Grover and major retailers' associations warn that this levy will inevitably be passed on to consumers through higher prices or surcharges. Furthermore, they argue that introducing friction and costs to high-value digital payments could reverse years of progress in India's cashless adoption. The policy appears aimed at addressing the financial losses incurred by banks and NPCI in processing billions of zero-MDR transactions. However, critics contend it undermines the core philosophy of UPI as a low-cost public good. Observers are now watching whether the government will adjust the threshold or rate, and how merchants might react by restricting large UPI payments.
What to watch next
- Watch for final government notification on fee thresholds and rates.
- Monitor if large retailers restrict high-value UPI transactions.
- Track consumer price adjustments in retail and e-commerce sectors.
What was said5
Attributed, verbatim. Every quote is checked against the article it came from. One that does not match is not shown.
Kumar Rajagopalan
2 quotes“Small merchants will now think twice about whether to accept cash or UPI”
In the article
…to steer transactions back toward cash," it said. RAI also warned that the charge "could undo years of progress in digital payment adoption" among India's smallest retailers, just as the festive season gets underway. " Small merchants will now think twice about whether to accept cash or UPI ," said RAI CEO Kumar Rajagopalan. RAI said the shift back to cash would also hurt the government's own formalisation push, as transactions that move off the UPI network no longer feed into GST reporting, the opposite…
“This cuts against the government's own formalisation agenda. UPI acceptance should be incentivised, not taxed”
In the article
…cash would also hurt the government's own formalisation push, as transactions that move off the UPI network no longer feed into GST reporting, the opposite of what a decade of digitisation policy has tried to build. " This cuts against the government's own formalisation agenda. UPI acceptance should be incentivised, not taxed ," Rajagopalan was quoted as saying. The retail body also raised objection over treating all UPI transactions alike, as it argued that most such payments draw directly from a savings or current account and function as…
Ashneer Grover
2 quotes“Then call it tax. Why are you calling it a ‘charge’, ‘MDR’, or claiming that it won't affect the customer?”
In the article
…payments should clearly be called a “tax”. In an interview with Times Now, Grover was asked about the argument that only those who can “afford” the fee are being asked to pay it. Shredding the logic, Grover answered: “ Then call it tax. Why are you calling it a ‘charge’, ‘MDR’, or claiming that it won't affect the customer? ". Deep Dive Citing an example, Grover asked if one would be willing to pay ₹500 every month for breathing just because they can “afford” it. “Is there any logic to it?,” he asked. A video of his interaction went…
“End of the day who pays? Whether it is tax or any other charge, the consumer pays.”
In the article
…interview: "The government says we collect excise from oil companies, the consumer won't be affected. But is that the case? We pay ₹100 at the pump for a petrol that costs ₹40-50, all because of the excise and tax.... End of the day who pays? Whether it is tax or any other charge, the consumer pays. " Also Read: UPI merchant fees: What to know about person-to-person payments, monthly quota Notably, the government has said that around 96% of merchant transactions will remain unaffected due to the charge because they…
Santosh Katariya
1 quote“UPI has been a powerful enabler of consumption and formalisation, and any move that increases the cost of acceptance needs to be carefully calibrated”
In the article
…CMAI President Santosh Katariya was quoted as saying. He further said that adding another cost to digital transactions at this point risks putting further pressure on an ecosystem that is still finding its footing. " UPI has been a powerful enabler of consumption and formalisation, and any move that increases the cost of acceptance needs to be carefully calibrated , particularly during the most important sales period of the year," Katariya added. From October 15, merchants accepting UPI payments above ₹2,000 will pay a fee under the new framework, but customers will not have to…
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So what3
Who is affected first and what likely follows, with a direction and a horizon. Extracted from the reports, never invented.
- Merchants increased transaction costs· immediate
- Consumers potential price increases· weeks
- Digital Payment Ecosystem slowed adoption· longer
Sources2
- [1]Hindustan TimescriticalSmall merchants may rethink accepting UPI over cash, says Retailers' body on merchant fee row
- [2]Hindustan Timescritical'End of day consumer pays': Ashneer Grover questions UPI merchant fee, says 'call it tax'