UPI Charges Explained: Who Will Pay the 0.4% Fee? Why Cash flow will increase?

GOVERNMENT SAYS MERCHANTS PAY — BUT WILL CONSUMERS ESCAPE THE COST? By Saurabh Shukla UPI was built on one powerful promise: fast, seamless and free digital payments. That model changes from October 15. A new 0.4% Merchant Discount Rate will apply to specified UPI payments to merchants above ₹2,000, with the MDR capped at ₹300 for transactions of ₹75,000 and above. The government says customers will not be charged and banks must prevent merchants from passing the cost on. 👉🏽 But there is another layer: 18% GST will apply to the MDR. GST-registered businesses can claim input tax credit, while the impact on some smaller, unregistered merchants remains a live concern. ▪️ So the real question is not simply: Who pays the UPI fee? It is: Can the government ensure that a merchant-side cost does not eventually become a consumer-side cost? VIDEO HIGHLIGHTS 🔹 The free UPI merchant-payment era changes from October 15 🔹 Merchants face 0.4% MDR plus GST on the MDR 🔹 Government promises monitoring against consumer pass-through 🔹 Traders warn that higher payment costs could push transactions towards cash [00:21] GOVERNMENT ENDS FREE UPI ERA After years of zero-MDR merchant payments, specified UPI transactions above ₹2,000 will now attract a 0.4% MDR. The government says P2P transfers and most merchant transactions will remain free, with around 96% of P2M transactions unaffected. “सरकार ने जब कहा कि भाई यूपीआई अब फ्री नहीं रहेगा क्योंकि जब यूपीआई 2020 और 21 में सरकार लेके आई थी और हम सबके फोन में Paytm करो Google Pay करो PhoneP करो ये सब आ गया तो सरकार ने कहा यह फ्री है” [00:21] [01:26] WHO ABSORBS THE COST? The policy places MDR on merchants, not customers. But businesses ultimately operate on margins. If payment costs rise, the pressure to absorb, negotiate or recover those costs becomes a commercial question. “अब उसमें भी सरकार कह रही है कि यह पैसा जो है ग्राहक को नहीं देना है यह कारोबारी को देना है” [01:26] [03:42] GOVERNMENT CLARIFICATION VS MARKET CONCERNS The Finance Ministry has rejected claims of external pressure behind the MDR decision. It says the charge supports the wider payment ecosystem. “वित्त मंत्रालय ने बकायदा कुछ क्लेरिफिकेशंस दिए हैं वित्त मंत्रालय ने कहा है कि यूपीआई लेनदेन पर एमDR लगाने में अमेरिका के दबाव के आरोपों में कोई सच्चाई नहीं है” [03:42] [08:38] THE SMALL-MERCHANT QUESTION The framework exempts eligible small merchants and keeps low-value payments outside the MDR. But the treatment of GST on MDR creates a separate concern for merchants unable to claim input tax credit. “तो सरकार ने यह कहा है कि अह कैलकुलेशन के मुताबिक 75,000 या उससे अधिक हर ट्रांजैक्शन पर 300 की कैप लगी है फीस लगी है” [08:38] [12:34] WILL MARKETS RETURN TO CASH? The government plans to monitor UPI usage and prevent merchants from passing MDR to customers. But traders in several markets have raised concerns about the additional cost and its possible impact on digital payments. “अगर दुकानदारों को यूपीआई का भुगतान अलग से करना पड़ेगा जो एमडीआर चार्ज लगता है तो दुकानदार निश्चित रूप से कैश की तरफ लौटेंगे या तो यूपीआई लेना बंद कर देंगे” [13:06] ♦️If UPI is to remain the backbone of India’s digital economy, can the new merchant-cost model preserve adoption without shifting the burden down the chain? 👉🏽 Support independent, ground-driven journalism that questions policies affecting your pocket—support The Red Mike. #UPI #Finance #EconomicNews #TheRedMike #GroundReport Join this channel to get access to perks:    / @theredmike.   ♦️The Red Mike is a new movement in centrist Journalism. We tell your stories. Ground reports the way they should be. To say what’s right, and not what is just popular. Stories from India & around the world that impact and affect you. Your Mike. Your Story. . For advertisement & Sponsorship Email us at - ads@theredmike.com WhatsApp Number: +91- 9821728111 . . . . रेड माइक पत्रकारिता में एक नया आंदोलन है। हम आपकी कहानियाँ सुनाते हैं। ग्राउंड रिपोर्ट वैसी ही जैसी होनी चाहिए. बात ऐसी जो सही हो, सिर्फ़ लोकप्रिय नहीं। भारत और दुनिया भर से कहानियाँ जो आपको प्रेरित और प्रभावित करती हैं। लाल माइक - आपका माइक, आपकी आवाज़। ** SUBSCRIBE / FOLLOW US ** 🔶 WEBSITE: 🔶 https://www.theredmike.com/ Twitter : https://x.com/TheRedMike FACEBOOK :   / theredmike   INSTAGRAM :   / theredmike   WHATSAPP : https://whatsapp.com/channel/0029VaGh... #TheRedMike #लालमाइक #laalmike