Pune: Central govt’s proposed charges on commercial UPI transactions above Rs 2,000 have dampened the mood ahead of the festive shopping season.Rather than bracing for the onslaught of business, merchants in the city are worried about these charges eating into their already thin margins. This, merchants say, is especially true of high-value purchases like electronics, garments, household goods and food items.“Almost 80% of our payments are via UPI. During the festive period, people buy a lot of dry fruit for personal use and gifting,” Bhavesh Desai, who runs a dry fruit store on Salunke Vihar Road, says, adding that he expects to increase prices from Oct 15, when the new charges kick in.Under the proposal, a merchant discount rate (MDR) of 0.4% will apply to UPI transactions exceeding Rs 2,000. This fee has been capped at Rs 300 per transaction.“There will be almost a 10% impact on profit margin if we have to pay this charge during the festive period,” a household goods retailer on Laxmi Road says. “If we discourage people from paying via UPI, we may lose the sale altogether.”A main draw of the festive period is the deep discounts on various goods and offers on bulk purchases. Retailers say they may now have to rethink such offers. “We operate at 1-2% margins,” says Dinesh Gupta, who runs a mobile phone outlet in Fatimanagar. “We will have no choice but to reduce discounting and freebies on purchases. There is likely to be an increase in cash purchases.”Other electronics and consumer-durable retailers too suggest they would further incentivise payments in cash.A few merchants are considering asking customers to split a bill into multiple payments to avoid paying the MDR. “The average ticket size of festive purchases is around Rs 5,000. Since 70% of payments are via UPI, we may ask consumers to make split payments in half,” says Kartik Patel, who owns a sari store on Laxmi Road. It is still unclear whether such a practice would comply with the new framework.Some retailers said that they are considering peer-to-peer (P2P) payments if the amount is high. “Since P2P UPI is not charged, if I show the customer my personal QR code, I may not have to pay the additional charge,” says a kirana store owner in Wanowrie. This move could have tax or accounting implications, which would need to be clarified with a tax professional.“Since jewellery is a high-ticket item, many jewellers may ask customers to make partial payments in cash,” says a jeweller from Camp.The change could also alter consumer payment behaviour. “We typically buy many large home appliances during the festive season. If we are getting better discounts via cash or debit card, we can use that,” says Undri resident Pranav Rathod.
