Adv. S. Abdul Nazar, State General Secretary of the Kerala Gold and Silver Merchants Association (KGSMA), stated that the decision to impose a 0.4% Merchant Discount Rate (MDR) on specific UPI merchant transactions exceeding Ra. 2,000, effective October 15, is a matter of serious concern for the gold trade sector.

Although a maximum cap of Rs. 300 has been set for transactions of Rs. 75,000 and above, the gold jewelry sector predominantly deals in high-value transactions. Consequently, for a jewelry establishment handling numerous UPI transactions daily, the cumulative MDR costs incurred on each transaction will translate into a significant additional operational expense by the end of the month.

For instance, an MDR of up to Rs. 200 would apply to a UPI transaction of Rs. 50,000, while up to Rs. 300 would apply to transactions exceeding Rs. 75,000. Given the thousands of high-value digital transactions occurring in the gold trade sector, the total financial impact of this cost cannot be underestimated.

While the government has clarified that the MDR should not be collected directly from the customer, the financial burden ultimately falls upon the merchant. For jewelry establishments already grappling with various obligations—such as GST, hallmarking, HUID, banking charges, security, and employee-related expenses—the addition of this new payment cost will particularly impact small and medium-sized enterprises. Given that UPI has become a cornerstone of the nation’s digital economy, the gold jewelry trade sector requires special consideration; high-value gold transactions should not be treated in the same manner as routine retail transactions.

At a time when digital payments are being encouraged and transparent trade is essential, the government and relevant authorities must intervene urgently to prevent imposing an additional financial burden on merchants using UPI.

KGSMA urges the authorities to consider waiving the Merchant Discount Rate (MDR) for high-value transactions in the gold trade or granting a special exemption to the gold jewelry sector.