CMAI Welcomes UPI Fee Deferral, Seeks Relief For Small Retailers
The Clothing Manufacturers Association of India (CMAI) has welcomed the deferment of the proposed merchant discount rate (MDR) on select UPI merchant payments, while seeking a review of its impact on small apparel retailers operating on thin margins.
The framework, originally scheduled to take effect on October 15, provides for a 0.4% charge on eligible person-to-merchant transactions above Rs 2,000, capped at Rs 300 per transaction. A revised implementation date will be announced after Diwali.
“CMAI welcomes the decision of the UPI and Services Steering Committee to defer the Merchant Discount Rate (MDR) on select person-to-merchant (P2M) UPI transactions until after Diwali. The deferment will help the sector get through the festive season without disruption. In the longer term, we urge the Government and NPCI to review the framework, particularly its impact on smaller retailers operating on very thin margins,” said Santosh Katariya, President, CMAI.
The association said the festive quarter is a crucial trading period for apparel retailers, with UPI now widely used at store counters. Introducing charges during peak footfall would have required changes to billing and accounting systems, transaction reconciliation and staff training.
CMAI acknowledged the safeguards for smaller transactions and eligible small merchants but said apparel purchases frequently exceed Rs 2,000, particularly during festive and wedding shopping. It argued that a substantial share of apparel retail sales value could consequently attract the charge.
While larger retailers may have greater capacity to absorb payment costs, smaller businesses face an additional burden alongside rent, wages and working-capital expenses, the association said.
CMAI urged the government and NPCI to reconsider the Rs 2,000 transaction threshold, widen the small-merchant exemption beyond the stated Rs 1 lakh monthly collection limit and introduce a graded fee structure linked to business size.
It also sought adequate notice before implementation and a subsequent review of the framework’s effect on small retailers’ willingness to accept UPI payments.
The association said it supports a financially sustainable digital payments ecosystem and would share sector-specific data and member feedback with NPCI and the Ministry of Finance to help inform the review.
