In recent times, an increasing number of users across India have noticed that RuPay credit card UPI payments are being declined by merchants even for everyday transactions. What once seemed like a promising method to streamline expenses and earn rewards is now slowly losing traction on the ground. But why is this happening?
Let’s break down the issue based on user experiences and current facts.
What Is RuPay Credit Card UPI and Why Was It Popular?
RuPay credit cards linked to UPI (Unified Payments Interface) gained popularity for a few key reasons:
- Simplified bank statements: Users could separate UPI spends from their primary bank accounts.
- Reward points: Many banks offered reward points on UPI spends using RuPay credit cards.
- Wide acceptance (initially): With growing government backing, RuPay was accepted at most local merchants and services.
What’s Changed Recently?
Across cities like Kolkata, Bangalore, and even parts of Hyderabad, users report that local merchants have disabled RuPay UPI payments. The shift has been significant, with even metro recharge kiosks and digital cafeterias like Hungerbox opting out.
The root cause? Merchant Discount Rates (MDRs).
Understanding MDR: Is There Really a Fee?
The general understanding backed by government guidelines is that:
- UPI transactions linked to bank accounts (below ₹2,000) are MDR-free.
- RuPay credit card UPI transactions, however, may incur charges, particularly when the amount exceeds ₹2,000 or if certain merchant conditions aren’t met.
But reality diverges. Even for small transactions (under ₹500), some merchants have shown deductions of ₹10–₹14 from their accounts. In one reported case, a merchant on Paytm was charged 2.65% MDR regardless of transaction size.
Why Are Small Businesses Still Being Charged?
Here’s what’s likely happening:
- Misinformation or fear of being charged: Some merchants, especially those watching social media videos, are misinformed about MDR rules and proactively disable RuPay.
- Turnover-based classification: Only businesses with annual turnover below ₹20 lakhs qualify for zero MDR. Many vendors even with thin margins cross this threshold in gross sales, making them ineligible for fee waivers.
- Credit card UPI vs. bank UPI confusion: Users and merchants often confuse the two. Credit card UPI (including RuPay) is not exempt from charges in many cases, unlike regular UPI from bank accounts.
What Are Users Doing in Response?
The community feedback shows varied responses:
- Some users have stopped using RuPay cards altogether, citing poor acceptance and limited offers.
- Others have switched to alternatives like UPI Lite or wallets like PayZapp (which offer cashback on wallet loads).
- Selective shopping: Some users consciously choose to shop from merchants who continue to support UPI CC (credit card) payments.
- Escalation attempts: There have been calls to raise complaints with NPCI and RuPay, especially when government-affiliated services stop accepting RuPay cards.
Is There a Solution or Workaround?
For users who want to stick with RuPay:
- Get a Lifetime Free (LTF) RuPay credit card to avoid unnecessary fees.
- Use it selectively at merchants who clearly support RuPay UPI.
- Consider using UPI Lite or bank-linked UPI for small-value transactions.
- Educate merchants (where possible) about MDR rules, especially if their turnover is under ₹20 lakh.