Industry Odisha Bureau, Sep 17: A new 0.4% Merchant Discount Rate on UPI transactions above Rs 2,000 kicks in October 15. Retailers and apparel makers warn it could reshape festive pricing.
The Fee Structure
The MDR will be capped at Rs 300 for transactions worth Rs 75,000 and above. Government rules bar retailers from directly passing this charge onto consumers.
Despite that restriction, retailers say the added cost burden could still influence prices. Festive discounts, industry executives warn, may also take a hit this season.
Retailers Already Under Pressure
Retailers are grappling with existing inflation and rising logistics costs across categories. Disruptions linked to the West Asia conflict have added further strain.
Retailers Association of India CEO Kumar Rajagopalan said some retailers may raise prices. Others could scale back festive discounts to offset the new MDR cost.
A large department-store chain noted festive purchases frequently cross the Rs 2,000 threshold. That makes the new charge especially relevant during peak shopping season.
Apparel Sector Flags Timing Concerns
Clothing Manufacturers Association of India president Santosh Katariya flagged the reform’s timing as a concern. He said the MDR rollout adds pressure just as festive demand peaks.
Industry executives said smaller retailers operating on thin margins face the sharpest impact. Some fear the added cost could push certain transactions back toward cash.
While consumers won’t see a direct MDR line item, retailers say indirect price hikes remain likely. Festive discounts may shrink instead, executives across categories widely cautioned.
