Bengaluru businesses across fuel retail, pharmacies, restaurants and wholesale trade are opposing a proposed UPI charge that would add a merchant discount rate of Rs 5 to each UPI transaction above Rs 2,000 from October 15, saying the cost could further squeeze already thin operating margins.
The proposed UPI charge has drawn concern because these sectors rely heavily on digital payments for routine customer transactions. Fuel dealers in Bengaluru have urged the Centre to exempt petroleum dealers from the proposed MDR, according to a report by the Times of India.
The proposed fee is described as a merchant discount rate, or MDR, and would apply to certain UPI transactions above the Rs 2,000 threshold. The report does not state that the charge applies to every UPI payment, nor does it provide details of the wider categories of transactions covered by the proposal.
Fuel bunk owners are among the businesses seeking an exemption. Their concern is particularly focused on the effect of an additional fixed charge on transactions where margins are already under pressure, the report said. The proposal has also faced opposition from pharmacies, restaurants and wholesale traders in the city.
For merchants, a fixed Rs 5 fee can have different consequences depending on the value and frequency of transactions. Businesses processing repeated digital payments would need to account for the charge as an operating cost if the proposal takes effect in its reported form. The affected sectors have warned that this could discourage digital payments or lead to pressure to recover the cost through pricing or payment preferences.
The issue also highlights the role UPI now plays in Bengaluru’s everyday commercial system. Fuel stations, pharmacies, eateries and trading establishments use digital payments to complete purchases without cash handling. Any change in the cost structure for merchants could therefore affect how businesses accept payments, although the report does not establish whether customers would face a separate charge.
The opposition has come before the proposed October 15 implementation date. Bengaluru’s fuel dealers have specifically asked the Centre to remove petroleum dealers from the scope of the MDR, while businesses in other sectors have raised concerns about the impact on their margins and the continued use of digital payments.
The next step is the reported start of the proposed Rs 5 MDR on October 15, subject to the final policy and any exemptions or changes announced before then.
