Heard in Chandni Chowk: ‘No one carries cash now, merchants have to bear UPI fee’

Traders say asking customers to switch to cash is impractical. (Express photo)

The wedding and festive season rush is back in Chandni Chowk. The lanes are packed with shoppers picking up lehengas, sherwanis and sarees. But for traders, the buzz comes with a new worry – a 0.4% fee on UPI transactions above Rs 2,000, which the merchants will have to pay from October 15.

At Novelty Creations, where wedding clothes start at Rs 10,000, proprietor Rohit Khanna had been counting on the season to bring in good business. Now, he is calculating what the new charge could mean for his margins.

“Almost all our products cost more than Rs 2,000 and everyone pays by UPI now. So, we will have to bear the charges. Along with the competition, a businessman’s primary obstacle to growth is the government,” he said.

“Our expenses are increasing every day. There is inflation, personal income tax, then GST and now this,” Khanna said, adding that his income had been “severely disproportionate” to his expenses.

Ajay Kumar Mittal, proprietor of a Lucknowi Chikankari store, echoed Khanna.

“Initially, they forced us to shift to UPI. Now, 10 years later, they have levied charges. Some politicians say 0.4% is nothing. But in aggregate, for small traders like us, it is a huge number,” he said.

While there have been murmurs about switching back to cash transactions, Rakesh, a manager at another wedding garment store in the area, said that asking customers to make the switch is impractical.

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“No one carries cash around these days. Even if we ask

our customers to get the money from ATMs, most of them

don’t work in Chandni Chowk and there is always a huge queue in front of the very few that do,” he added.

There has also been talk of customers splitting large bills into smaller UPI payments to avoid the charge. Mittal, secretary of the Chandni Chowk Sarv Vyapar Mandal, said this was unlikely to work.

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“Everyone has a limit on the number of transactions they can make in a day. So, most customers won’t be splitting a large payment into multiple smaller UPI transactions to avoid the charges above Rs 2,000,” he said.

Some traders, meanwhile, are hopeful the decision could be rolled back before October 15.

“One month will be more than enough time for the traders’ associations and the government to come to a consensus and make some changes,” said Anoop Goyal of Anand Garments.

Mittal, however, is not so hopeful. “We have seen time and again, the RBI will introduce some measures, and we will have to bear the brunt. The RBI said the MDR (Merchant Discount Rate) levied for credit card transactions will be borne by us and not the customers… The MDR for UPI transactions is the start of something similar,” he said.

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Mouj Baluja, owner of Balujas Shoes – a footwear store that has been around since 1919 – called the transaction fee a “strategic move” by the government. “First, they slowly eased us into UPI. Now, no one can live without it. For this system to function smoothly, they have to levy these minimal charges.”

He worries that the fee could rise over time, increasing the burden on the merchants.

Chandni Chowk Sarv Vyapar Mandal president Sanjay Bhargava described as “unfortunate” the timing of imposition of the fee.

“The government could have introduced this in the next financial year along with the Budget. The market has been in a slump since the Red Fort blast last year, and just when things were picking up, the government has added to our problems,” he said.