- New GST Rate: 18% GST on card payments below ₹2,000 could increase transaction costs for merchants.
- Impact on Small Merchants: Small merchants might discourage card use due to higher fees, unlike larger merchants who benefit from input tax credits.
- Shift to UPI: With UPI transactions often incurring lower fees, customers may prefer UPI over card payments to avoid extra charges.
- Credit Card Usage: High-spending customers may continue using credit cards for larger transactions due to rewards and credit access.
- Concerns about Retrospective Effect: There is uncertainty about whether the GST will be applied retrospectively, which could significantly affect payment aggregators’ margins.
Overall, this move might further skew the payment landscape towards UPI while maintaining credit card usage for higher-value transactions.