New Delhi:
There is resentment among business organizations after the government’s decision to impose 0.4% charge on UPI payments above Rs 2,000. Many business organizations in Delhi have indicated that to avoid additional expenses, they may encourage customers to do cash transactions instead of digital payments.
The government on Tuesday implemented a new system for large digital merchant payments, under which 0.4 percent fee will be charged on UPI transactions above Rs 2,000. With this, the system of zero merchant discount rate (MDR) applicable from January 2020 has ended. According to the new system, a maximum of Rs 300 can be charged on payments of Rs 75,000 or more. The government says that this will help in strengthening the digital payment structure. But a section of businessmen are considering it as an additional financial burden on the business.
We will promote cash payment: President of Kamala Nagar Market Association
Kamla Nagar Market Association President Nitin Gupta said that traders had supported the government’s initiative to promote digital payments. But if they have to charge extra, they will encourage cash payment. Gupta said, “We are already paying transaction fee and 18 percent GST (Goods and Services Tax). Now if the government also charges us UPI MDR, we will promote cash payments. When the government brought UPI payments, we supported it.
He said, “If charges are also imposed on UPI transactions, we will not support it and will start promoting cash payments.” Amit Gupta, General Secretary of New Delhi Traders Association, said that after this decision of additional charges, now UPI payments will become an expensive option for traders working on low profits.
What did the Retailers Association of India say?
Here, the Retailers Association of India (RAI) said on Wednesday that the government’s decision to impose merchant discount rate (MDR) of 0.4 percent on UPI transactions may adversely affect the progress made in adopting digital payments among small retailers before the festivals. After keeping UPI payments completely free for almost 6 years, the government announced to impose a charge of 0.4 percent on payments of more than Rs 2,000 made to merchants or shopkeepers through this platform from October 15 this year. This fee will have to be paid by the merchant and the customers will not be burdened by it.
RAI warned in its statement that the fee could set back years of progress in adopting digital payments among India’s smallest retailers, just in time for the festive season. RAI Chief Executive Officer (CEO) Kumar Rajagopalan said, “Small traders will now think about whether to accept cash or UPI.”
RAI said the return to cash will also harm the government’s formalization efforts, as transactions outside the UPI network will no longer be recorded in the Goods and Services Tax (GST). This is contrary to the direction that has been attempted through the decade-long digitization policy.
There is no charge to be imposed on customers: Swadeshi Jagran Manch
Meanwhile, Swadeshi Jagran Manch (SJM), affiliated with the Rashtriya Swayamsevak Sangh (RSS), said on Wednesday that the government should reconsider any proposal to impose Merchant Discount Rate (MDR) on UPI transactions above Rs 2,000. The forum said that such a step is not appropriate considering the costs associated with the transaction. The Finance Ministry said in a statement, “Customers will not have to pay any fee for making such payments through UPI.” The ministry also said, “MDR is a fee imposed within the merchant payment system. This is not a charge imposed on customers making UPI payments.
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Also read: Why did the completely free UPI system end after 6 years? Know the mathematics of expenses
Source: ndtv.in
