Onlykashmir.in News Desk
The Traders Association Central Lal Chowk has objected to the new Merchant Discount Rate framework for UPI payments, warning that the proposed charge on eligible transactions above ₹2,000 could raise operating costs for local businesses and push some traders back toward cash. The association held an emergency executive meeting to discuss the framework, which is set to take effect from October 15, when a 0.4 percent MDR will apply to specified person to merchant UPI transactions above that threshold, capped at ₹300 for transactions of ₹75,000 and above.
Association president Feroz Ahmad Baba said the additional cost could disproportionately affect small traders, micro enterprises and local shopkeepers who already operate on narrow margins. He noted that Lal Chowk’s traders had steadily shifted toward QR code based payments in recent years, making digital transactions central to everyday commerce in the market, and argued that imposing a cost on higher value transactions risked weakening that shift just as it had taken root. The association warned that if banks and payment service providers do not reconsider the framework, some merchants may begin discouraging UPI payments for larger purchases in favour of cash.
The concern voiced in Srinagar mirrors similar objections raised by retail trade bodies elsewhere in the country, several of which have flagged the potential for the new MDR to raise costs for thin margin businesses and nudge transaction behaviour back toward cash. The Finance Ministry has sought to reassure merchants that the change is narrower than it may appear, saying UPI will remain entirely free for person to person transfers, that payments to merchants up to ₹2,000 will stay free, and that the government estimates about 96 percent of person to merchant transactions will remain unaffected. Officials have also clarified that the MDR is not a tax or a direct consumer charge but a fee distributed among participants in the payment ecosystem, including banks and payment application providers.
For Lal Chowk’s trading community, however, the practical concern lies with wholesalers and retailers who routinely process higher value purchases, where the association says the charge could accumulate into a meaningful cost over time. The association has urged authorities and payment ecosystem stakeholders to reconsider the structure before it takes effect, framing the issue as one that could shape how Srinagar’s traders accept payments once the October 15 deadline arrives.
