Ahmedabad-based industrial marketplace Pneucons announced it will stop accepting UPI payments from October 10. The decision follows the government’s recent move to impose a 0.4% merchant discount rate (MDR) on person-to-merchant UPI transactions above ₹2,000, effective October 15. Pritesh Lakhani, co-founder of Pneucons, highlighted that this MDR charge would severely reduce the company’s margins on UPI orders, prompting the payment method suspension.
Pneucons earns a 0.5% commission on the pre-tax value of each order. For example, on a ₹10,000 order, the company earns ₹50. However, with the MDR charge of 0.4% applied on the total amount paid by the customer including GST, the cost on a ₹11,800 payment (₹10,000 plus 18% GST) would be ₹47.20. This leaves Pneucons with only ₹2.80 from its original ₹50 commission, effectively eroding 94% of its margin on UPI payments above ₹2,000, Lakhani explained on social media.
The MDR charge applies to the GST component as well, increasing the financial impact on merchants like Pneucons. The government’s MDR imposition on UPI payments aims to generate revenue but has raised concerns among businesses that rely heavily on digital payments. Pneucons’ move reflects broader challenges faced by marketplaces and merchants adjusting to the new cost structure, which could influence payment preferences and operational strategies in the industrial sector.
Pneucons’ decision to disable UPI payments will take effect from October 10, ahead of the MDR enforcement date of October 15, 2026. The company’s co-founder communicated this change publicly on X, signaling a significant shift in payment acceptance for the platform’s customers.