ITANAGAR, SEP 21:

The Arunachal Chamber of Commerce and Industries (ACC&I) has urged the Centre to raise the proposed threshold for Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) merchant transactions from ₹2,000 to above ₹10,000, saying the lower threshold could increase the cost burden on small traders.

Under the new framework announced for implementation from October 15, 2026, a 0.4 per cent MDR will apply to specified person-to-merchant (P2M) UPI transactions above ₹2,000, with the charge capped at ₹300 for transactions of ₹75,000 and above. The MDR is to be borne by merchants, while consumers will continue to use UPI without a transaction fee.

UPI merchant transactions up to ₹2,000 will remain outside the MDR framework. Certain specified sectors, including railways, fuel, insurance and telecom, will have a separate flat MDR structure.

Reacting to the proposed changes, ACC&I president Tarh Nachung urged the Centre to raise the ₹2,000 threshold to above ₹10,000. He said the proposed levy could particularly affect small traders and vendors who have increasingly adopted UPI as a convenient mode of payment.

Nachung said the introduction of charges on higher-value merchant transactions should be reconsidered to ensure that the cost of digital payments does not discourage small businesses from continuing to use cashless transactions.

The chamber maintained that UPI and other digital payment systems had played an important role in promoting cashless transactions and financial inclusion among small businesses. It argued that raising the threshold would help protect small traders while retaining the benefits of digital payments.

The ACC&I president said the chamber would decide its future course of action if its demand was not addressed.