Shops charging extra on UPI payments above Rs 2,000 to face QR code block

India's digital payments push is gathering pace, with most transactions now happening through UPI instead of cash. But merchants will now be charged a fee on UPI payments above Rs 2,000. To stop shopkeepers from passing this charge on to customers, the government is working on a new system. Going forward, this system will keep watch on any merchant who tries to recover the charge from customers.

If a shopkeeper is found forcibly charging customers the MDR fee, their UPI and QR code will be blocked directly. After that, the shopkeeper will no longer be able to accept payments through UPI at all -- the new system provides for direct action against rule-breakers.

The government is also considering setting up a separate system for resolving customer complaints. Through this, a customer who wants to complain about being charged extra in the name of MDR will be able to file a complaint easily and without hassle. The aim of this proposed arrangement is to ensure that customers are not charged unnecessary fees during UPI payments, and that merchants who break the rules face strict action.

It should be noted that this UPI charge will come into effect across the country from October 15. According to the NPCI, merchants will be charged 0.4 percent on UPI payments above Rs 2,000, and 18 percent GST will also apply on this charge. This means merchants will have to pay around Rs 9.44 for every Rs 2,000 payment.

Merchants, meanwhile, have issued a warning over the MDR charge on UPI. They say that if the government does not change this rule, they will either have to go back to cash transactions or stop accepting UPI payments above Rs 2,000 altogether.