Hyderabad: TPCC spokesperson Syed Nizamuddin on Wednesday demanded a UPI MDR rollback, claiming the proposed charge on higher-value merchant payments could raise costs across Hyderabad’s wholesale-retail chain.
Nizamuddin said merchants could absorb the additional cost through lower margins or reduced discounts. Alternatively, they could adjust prices or prefer cash for higher-value transactions.
He addressed a press conference at Gandhi Bhavan with Hyderabad DCC President Syed Khalid Saifullah. Bahadurpura Assembly in-charge Rajesh and senior Congress leader Advocate Jagan Mohan Reddy also attended.
Nizamuddin said the debate should extend beyond the Centre’s position that consumers would not directly pay the Merchant Discount Rate. Instead, he questioned who would ultimately absorb the cost on merchants receiving eligible higher-value UPI payments.
“Merely saying that the consumer will not be charged MDR does not settle the economic question,” he said. “If the merchant has to bear a new cost on every eligible higher-value UPI sale, who eventually absorbs that cost?”
From October 15, a 0.4% MDR will apply to eligible person-to-merchant UPI transactions above Rs 2,000. The charge will have a ceiling of Rs 300 per transaction.
However, person-to-person transfers and merchant payments up to Rs 2,000 will remain under the zero-MDR framework. The exemption will also cover specified small merchants receiving up to Rs 1 lakh monthly through UPI QR payments. The Centre has said about 96% of merchant transactions by number will remain unaffected.
UPI MDR rollback demand cites Hyderabad payment volumes
Nizamuddin said the issue had particular significance for Hyderabad because digital payments had become deeply embedded in daily commerce. Citing July data, he said Hyderabad district recorded about Rs 24,939 crore in UPI transactions. Rangareddy recorded Rs 35,119 crore, while Medchal-Malkajgiri accounted for Rs 31,748 crore.
Together, the three districts recorded nearly Rs 91,800 crore in UPI transactions during the month, he said. However, the figures covered all UPI transactions and not only merchant payments.
Nizamuddin argued that the Centre’s 96% figure presented only part of the picture. According to him, fewer higher-value merchant transactions could represent a much larger proportion of the money changing hands.
Therefore, he sought disclosure of the transaction value covered by MDR rather than only the number of affected transactions. “If 96% of transactions remain unaffected, the government should also tell people what share of merchant-payment value lies in the remaining 4%,” he said.
Using a tea stall as an example, Nizamuddin said a Rs 50 customer payment would remain below the MDR threshold. However, the tea seller buys milk, tea powder, sugar, disposable cups, gas and other supplies through larger transactions. He argued that charges at the supplier level could consequently enter the wider supply chain.
“If the wholesaler or supplier receiving that payment falls in the chargeable category, that additional cost enters the supply chain,” he said. “A small trader may sell in tens and hundreds of rupees, but he buys stock in thousands and tens of thousands,” Nizamuddin added.
He said the issue was particularly relevant to Begum Bazaar, where wholesalers routinely handled larger invoices on thin margins. Under the proposed rate, an eligible Rs 20,000 transaction would attract an Rs 80 MDR. Similarly, an eligible Rs 50,000 payment would attract an Rs 200 charge.
Nizamuddin said similar concerns applied to Laad Bazaar, where bridal and festive purchases could exceed Rs 2,000. He also cited Pathergatti, where pearl and jewellery transactions could involve higher values.
In addition, he said Hyderabad’s textile, handicraft, hotel and tourism sectors could face similar issues. “In Hyderabad, this is not merely a fintech issue,” Nizamuddin said. “It is a bazaar issue, a trader issue, a karigar issue and a tourism-economy issue.”
UPI MDR rollback sought for small traders
Nizamuddin also questioned the Rs 1 lakh monthly UPI-receipt ceiling for the small-merchant exemption. He argued that turnover should not be treated as profit. Moreover, he said even an ordinary neighbourhood business could cross the monthly threshold.
The TPCC spokesperson acknowledged that maintaining the UPI network, cybersecurity and payment infrastructure involved expenditure. However, he said policymakers needed to decide how to distribute those costs.
The Centre has maintained that MDR is not a tax. It has also said the charge would support the long-term sustainability and expansion of the UPI ecosystem. “The Centre should explain why small and traditional businesses above such a low threshold should become the source of that funding,” Nizamuddin said.
He demanded withdrawal of the MDR framework and stronger safeguards for micro, small and traditional retailers. Through the UPI MDR rollback demand, he also sought greater disclosure about the value of merchant transactions that would attract the charge.