By:- Lakshmi Venkataraman Venkatesan, Founding and Managing Trustee, Bharatiya Yuva Shakti Trust
“UPI has played an important role in bringing millions of small and micro businesses into the digital economy. For a first-generation entrepreneur, accepting digital payments is not only about convenience. It creates a record of business activity, improves financial discipline and can help build the formal financial history needed as the enterprise grows. The decision to keep small merchants receiving up to ₹1 lakh a month through UPI QR outside the MDR framework is therefore important. At the same time, we must recognise that ₹1 lakh in monthly UPI collections can be a relatively modest level for a micro business that is beginning to grow. As these entrepreneurs move from survival to growth, the transition should continue to support digital adoption. The introduction of a 0.4% MDR on eligible merchant transactions above ₹2,000 also brings the question of sustainability of the UPI ecosystem into focus. Sustainability is important, but it must go hand-in-hand with inclusion. As the framework evolves, it will be important to ensure that digital payments continue to remain accessible for grassroots entrepreneurs, enabling them to formalise their businesses and grow. The success of UPI’s next phase should ultimately be measured not only by transaction volumes, but by how effectively it continues to enable India’s smallest businesses to participate in the formal economy.”
