Bhopal (Madhya Pradesh): The end of free UPI from October 15 this year may impose an annual burden of around Rs 2,133 crore on the consumers of Madhya Pradesh, if the business firms and traders choose to pass the entire burden of MDR (Merchant Discount Rate) to them. MP accounts for 2.2% of the UPI transactions in the country, both in terms of volume and value.
According to NPCI (National Payments Corporation of India) data, quoted by SBI Research, the annual spend in Madhya Pradesh through UPI is around Rs 6.66 lakh crore. Around 500 crore UPI transactions are done annually in the state.
Transactions above Rs 2,000 constitute around 20% by volume and 86% by value. A rough calculation would show that of the total UPI transactions by value, those above Rs 2,000 in the state would come to around Rs 5.33 lakh crore. Given the MDR of 0.4%, it will add Rs 2,133 crore to the bill of the merchants.
Madhya Pradesh has adopted to UPI in a big way, with about 51% of the account holders (both current and savings) in banks in Indore using UPI for making payments for the goods and services consumed by them. In Bhopal, 45% account holders use UPI.
However, experts are unanimous that the move will not affect the UPI transactions significantly as people have got used to the convenience of using the UPI. But they differ on whether the merchants will pass on the entire burden to the consumers.
A senior banker from SLBC said that the business firms and traders will add the MDR charges to the prices, just as they do in case of transaction charges on credit and debit cards. Anil Chaubey, a retired senior banker said that due to competition, the businesses may pass on only a part of the burden to the consumers or even absorb it entirely themselves. Others say that the charges are minimal (Rs 8 for Rs 2,000 transaction) that the consumers may mind or even notice it.
According to Rajesh Jain, a senior chartered accountant, the PSU banks - and indirectly the government - will be the main beneficiary of MDR on UPI, with the SBI accounting for the highest UPI transactions both in terms of volume and value. “The government wants to generate resources without imposing a direct burden on the common man. So, it is using indirect means like this,” Jain said.
