A proposed charge on high-value commercial UPI transactions has sparked confusion and concern among traders and consumers, particularly in sectors such as fuel, gold and wholesale business.
The government has clarified that the proposed charge on commercial UPI transactions above Rs 2,000 will be paid by merchants and will not be directly charged to customers.
However, traders and consumers have raised concerns that businesses could eventually factor the additional expense into the prices of goods and services.
Traders Raise Concerns Over Additional Cost
Traders have opposed the proposed charge, arguing that businesses already bear multiple expenses, including GST, taxes, digital payment-related charges and other operational costs.
Some traders fear that the additional financial burden could affect profit margins, particularly for businesses operating on relatively low margins.
Consumers, meanwhile, have expressed concern that merchants may eventually pass on the additional cost through higher prices.
There are also concerns that increased transaction costs could discourage digital payments and potentially lead to a rise in cash transactions.
Petrol Pump Owners Oppose UPI Charge
Petrol pump dealers have particularly raised objections to the proposed charge.
Under the proposed arrangement, a flat charge of Rs 5 would apply to UPI payments above Rs 2,000 at petrol pumps, with the amount being deducted from the petrol pump owner’s account.
Petrol pump owners argue that their businesses are already operating under pressure because of fuel prices and relatively limited dealer margins.
Dealers have called for the proposed charge to be withdrawn and have also sought an increase in dealer margins from oil marketing companies.
Gold Traders Also Express Concern
Gold traders have also voiced concerns over the potential impact of the proposed UPI charge.
According to traders, demand for gold purchases has already been under pressure in some markets, and an additional transaction-related expense could increase the overall cost of doing business.
Consumers, meanwhile, are concerned that businesses could transfer the additional cost to customers through product pricing.
Traders have also warned that higher costs associated with digital payments could encourage some customers to return to cash transactions.
Government Clarifies Who Will Pay
Amid the concerns, the Union Finance Ministry has clarified that the proposed rule is scheduled to come into effect from October 15.
Under the proposal, a 0.4% charge on commercial UPI transactions above Rs 2,000 will be borne by merchants rather than customers.
The government has also stated that the proposed charge will have no impact on around 96% of person-to-merchant (P2M) transactions.
The clarification is intended to address concerns among consumers who feared that they would have to pay an additional amount while making high-value UPI payments.
Debate Over Impact On Consumers
While customers will not be directly charged under the proposed arrangement, concerns remain over whether merchants may incorporate the additional expense into the prices of goods and services.
The debate has therefore centred on how the proposed charge could affect business costs, consumer prices and digital payment behaviour.
The government, meanwhile, has maintained that the measure will have a limited impact on the wider person-to-merchant digital payment ecosystem.
