The Retailers Association of India (RAI) has raised concerns regarding the potential impact of transaction fees on the Unified Payments Interface (UPI) ecosystem. According to Kumar Rajagopalan, CEO of the RAI, the introduction of such costs could force small merchants to reconsider their reliance on digital payment methods.

For years, India has pushed for a 'less-cash' economy, with UPI serving as the primary engine for this transition due to its low-cost, real-time nature. However, the prospect of merchant discount rates or other transaction fees has sparked debate within the retail sector. The RAI argues that if the cost of processing digital payments becomes a financial burden, small-scale retailers—who operate on thin margins—may choose to prioritize cash transactions to avoid these fees. This shift could potentially reverse the progress made in digitizing the Indian economy, as merchants weigh the convenience of digital systems against the added expense of transaction charges. While the government and banking regulators have historically subsidized these costs to encourage adoption, the industry is now signaling that any move toward a fee-based model could disrupt the current digital payment landscape.