The introduction of a Merchant Discount Rate (MDR) on selected UPI transactions is raising concerns among electronics and mobile retailers, particularly businesses operating on narrow profit margins. Under the new framework, eligible merchant transactions above ₹2,000 will attract an MDR of 0.4% from October 15, 2026.
For electronics retailers, the concern is linked to the economics of the sector. Mobile phones, laptops and other electronic products often involve high-value transactions, while retailers face intense competition from online platforms and limited flexibility in pricing.
A 0.4% charge can therefore become an additional operating cost on eligible UPI payments. For example, a ₹50,000 transaction would attract an MDR of ₹200 under the standard rate, subject to the applicable rules and caps. The charge is paid within the payment ecosystem rather than directly by the customer.
Retailers also have limited scope to simply increase product prices to recover the cost. Brand pricing structures, online discounts and competition between physical stores can make passing additional expenses on to consumers difficult.
The issue has already prompted mobile and electronics retailers to seek relief from the proposed charges, citing the sector’s thin margins.
However, the new framework does not affect every UPI payment. Transactions up to ₹2,000 and eligible small-merchant transactions remain outside the MDR framework, with the government stating that around 96% of merchant UPI transactions will remain unaffected.
