New Delhi, Sept. 16 -- The reintroduction of merchant charges on high-value UPI payments is adding to retailers' costs ahead of the festival season, with trade bodies warning of margin pressure and a possible shift in consumer payment behaviour.

The National Payments Corporation of India (NPCI) has introduced a 0.4% Merchant Discount Rate (MDR) on person-to-merchant UPI transactions above Rs.2,000 from 15 October. The charge will be capped at Rs.300 for transactions of Rs.75,000 and above. Consumers will not be charged, but MDR will be borne by merchants.

For retailers, the new cost comes at a time when margins are already under pressure.

"Most retailers earn about 3% of the turnover as their net profit, if they are lucky. If this take...