New Delhi: Businessman Ashneer Grover, co-founder of BharatPe, has voiced his dismay with the government’s newly imposed fee on UPI transactions to shops and businesses. His argument is straightforward: in spite of the Government’s assurances that the fee will be levied just on shops, it will be paid by everyone in the long run.
What is the new rule?
The small fee known as MDR (Merchant Discount Rate) will be applicable from October 15, when shoppers pay the retail outlets with UPI transactions above ₹2,000. The charges are 0.4% and there is a maximum limit in big payments of ₹300. Smaller shop payments will remain free, as will payments between friends and family. The government claims this fee is not a tax, and will be as usual collected by banks and payment processors, not customers.
What Grover is saying
But Grover isn’t convinced by this account. He was asked a simple question in the TV interview why not simply refer to this as a fee if it is only paid by those who can afford it? He thinks that when companies have to cover an additional expense they will pass it on to the cost of their products. Therefore, although the customer may not have to pay a direct charge, they may well be paying more when they go shopping, in the form of increased prices. He likened it to the way the fuel tax works the tax is imposed on companies and the subsequent expenses are passed on to the buyer of the petrol.
He also asked the question of why the fee is required. In an earlier post, Grover asked if anyone was losing any money and who it is that banks and NPCI (the company operating the UPI, or payment gateway) were making money out of.
The bigger picture
So in summary, what Grover told the common folk is that the “shopkeepers pay it” statement doesn’t mean “you won’t feel it. The business often pays, but this price increase is masked by the costs that are added to the customer.
