Mumbai:- Imposing charges on UPI transactions could also affect small traders. According to a survey conducted by the Indian School of Business (ISB), nearly 70 per cent of street vendors make payments of more than Rs 2,000 at a time to their suppliers. In such a situation, despite the exemption of retail transactions from charges, they may have to bear additional costs while making wholesale purchases.
The ISB survey covered more than 720 street vendors across the country. In the survey, 10.4 per cent of vendors reported that their suppliers had demanded additional charges for accepting UPI payments during the 10 days preceding the survey.
According to the study, exemption from charges on retail transactions may provide some relief to small traders, but it may not completely protect them from the cost of payments made during wholesale purchases. Earlier this year, the government had allowed the imposition of a Merchant Discount Rate (MDR) of up to 0.40 per cent on merchant UPI transactions exceeding Rs 2,000. However, nearly 96 per cent of transactions have been exempted from these charges. The National Payments Corporation of India (NPCI) had initially planned to implement the charges from October 15, but later postponed the move until after Diwali. The revised date of implementation has not yet been clarified.
Speaking to journalists, ISB Associate Professor Prasanna Tantri said that there was no clear data available on the extent of losses businesses were incurring due to free UPI transactions. He said that imposing charges on UPI transactions should be considered only if continuing the existing system becomes unsustainable.
