Industrial marketplace Pneucons says it will stop accepting UPI after MDR reportedly wipes out 94% of its margin
Pneucons, an Ahmedabad-based industrial marketplace, has announced that it plans to disable UPI payments from October 10.
The interesting part is the reason.
According to its co-founder, the platform earns only around 0.5% commission on an order.
For example:
- Order value before GST: ₹10,000
- Pneucons commission: ₹50
- Customer payment after 18% GST: ₹11,800
- UPI MDR at 0.4%: ₹47.20
So out of the ₹50 commission Pneucons earns, ₹47.20 could go toward MDR — leaving just ₹2.80, meaning roughly 94% of its margin is gone.
The co-founder also pointed out that the company earns commission on the pre-GST value but MDR is calculated on the amount including GST.
The new framework is expected to impose 0.4% MDR on specified merchant UPI transactions above ₹2,000, while some small merchants and certain sectors have exemptions or lower charges.
This seems like an interesting unintended consequence of bringing MDR back to UPI. For high-margin businesses 0.4% may not look like much, but marketplaces operating on 0.5–1% commissions could be affected quite heavily.
Do you think businesses like this will start moving customers toward NEFT/IMPS/bank transfers, or will they eventually have to absorb the UPI cost?