The Retailers Association of India (RAI) and the Clothing Manufacturers Association of India (CMAI) have raised concerns over the reintroduction of a 0.4% Merchant Discount Rate (MDR) on UPI transactions.

The charge applies to UPI person-to-merchant transactions above ₹2,000. It is capped at ₹300 for transactions of ₹75,000 and above.

Retailers Raise Concerns

RAI said the new charge could increase costs for small retailers. The association also warned that it could affect digital payment adoption during the festive season.

RAI has called for a graded MDR structure. It wants debit-linked and credit-linked UPI transactions to be treated separately.

The association also said merchant charges should be linked with incentives. It plans to raise the issue with the National Payments Corporation of India (NPCI) and the Ministry of Finance.

CMAI Flags Impact on Margins

Santosh Katariya, President, CMAI, said the decision comes at the start of the festival season.

He said retailers and consumer-facing businesses are already working to improve demand and margins. According to Katariya, an additional cost on digital payments could put more pressure on businesses.

RAI Seeks Support for UPI

Kumar Rajagopalan, CEO, RAI, said the charge may encourage some small merchants to prefer cash payments.

RAI said many festive-season purchases cross the ₹2,000 mark. It argued that adding a fee to such payments could make cash more attractive.

Rajagopalan also said normal bank-to-bank UPI payments should not be treated like credit transactions. He said credit-linked UPI payments could have a different cost structure.

RAI has called for government support for normal UPI transactions. The association said digital payments support formal and traceable business transactions.

The concerns come as retailers prepare for the festive season and higher consumer activity.