Pneucons
Ahmedabad-based industrial marketplace Pneucons will stop accepting UPI payments from October 10, co-founder Pritesh Lakhani said on X. He said a new merchant discount rate (MDR) would consume 94% of the company’s margin on each UPI order above ₹2,000.
How the charge affects Pneucons
Lakhani said Pneucons earns a 0.5% commission on an order’s value before tax. On a ₹10,000 order, that amounts to ₹50. From 15 October 2026, a 0.4% MDR would apply to specified person-to-merchant UPI transactions above ₹2,000.
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With 18% GST, the customer’s payment on a ₹10,000 order is ₹11,800. The 0.4% MDR on that total is ₹47.20, leaving Pneucons ₹2.80 from its ₹50 commission. Lakhani said the difference between the pre-GST order value and GST-inclusive payment adds ₹7.20 to the MDR cost.
Lakhani also said 18% GST on the ₹47.20 MDR adds ₹8.50 to the payment cost. He said that GST is claimable, but has to be paid upfront, tying up working capital on each order. Government sources said there is no separate GST on MDR; GST applies to applicable MDR charges, and businesses are eligible for credits.
Rates and exemptions under the framework
The MDR applies to specified merchant transactions, while person-to-person transfers and small merchant payments remain free. Merchants, not consumers, must bear the charge, and banks have been directed to ensure it is not passed on to customers. The Unified Payments Interface is the payment system used for these transactions.
- Specified merchant transactions above ₹2,000: 0.4% MDR; transactions of ₹75,000 and above are capped at ₹300 per transaction.
- Essential and thin-margin sectors, including railways, telecommunications, insurance, fuel and agricultural inputs: flat ₹5 MDR on transactions above ₹2,000.
- Capital-market-related UPI payments, including mutual funds, securities, stock brokers and dealers: 0.02% MDR, capped at ₹300 per transaction.
- Street vendors and eligible neighbourhood shops receiving up to ₹1 lakh per month through UPI QR codes continue to receive payments without MDR.
