Itanagar, Sep 21: The Arunachal Chamber of Commerce and Industries (ACC&I) has urged the Government of India to raise the proposed threshold for Merchant Discount Rate (MDR) on select Unified Payments Interface (UPI) merchant transactions from Rs 2,000 to above Rs 10,000, citing concerns over the impact on small traders and vendors.
Under the revised UPI framework announced by the National Payments Corporation of India (NPCI), a 0.4 per cent MDR will apply from October 15, 2026 to specified person-to-merchant (P2M) transactions above Rs 2,000, with the charge capped at Rs 300 per transaction above Rs 75,000. The charge is proposed to be borne by merchants, while transactions below the threshold would continue to remain free of MDR.
Reacting to the proposed framework, ACC&I president Dr Tarh Nachung said the Rs 2,000 threshold could add to the operating costs of small businesses that largely depend on digital payments.
He said UPI has played a significant role in expanding cashless transactions and promoting digital payments, particularly among small traders and informal-sector businesses. He argued that maintaining a higher threshold would help preserve the incentive for merchants and consumers to use digital payment modes.
According to the ACC&I, small businesses such as paan shops, vegetable and fish vendors, and roadside sellers often operate on narrow margins, making even modest transaction-related costs significant.
The chamber maintained that raising the threshold to above Rs 10,000 would protect small traders from additional costs while allowing MDR to apply primarily to higher-value merchant transactions.
The ACC&I also highlighted the rapid growth of UPI and its role in supporting financial inclusion and improving the efficiency of retail payments.
Dr Nachung urged the Centre to reconsider the proposed threshold and adopt a measure that balances the sustainability of the digital payment ecosystem with the interests of small merchants. He said the ACC&I would decide its future course of action if its demand is not considered.