Great question!
Behind every shopkeeper (“Merchant”) is a PSP (Payments Service Provider) who issues (or does not issue) a Merchant Account, thus enabling (or preventing) the Merchant to accept UPI, Credit Card / Debit Card and other Digital Payments. PSP is a traditional bank, nonbank fintech or their authorized agents.
In return for accepting Digital Payments, Merchant incurs a cost called MDR (Merchant Discount Rate) levied by PSPs. While it’s not illegal to pass on the said cost to Consumers by way of Surcharge, many Merchants would find it difficult to do so in actual practice for fear of losing sales. (I, for one, walk out of a store if the Merchant tries to levy a Surcharge – and I know many people like me.)
To be fair, since there’s an effort and cost to accept Digital Payments, the decision on whether to do so or not should be left to the Merchant based on business factors. There’s no case for a fine.
GTM360@GTM360When all is said and done, there are only two reasons for a shopkeeper to accept credit card: (1) He will lose business if he does not (2) He will be able to make the customer overspend if he does. https://www.valuepenguin.com/credit-cards/credit-card-spending-studies … via @ValuePenguin
Credit Card Spending Studies (2018 Report): Why You Spend More When You Pay With a Credit Card
You may be inclined to spend more when you pay with a credit card instead of paying with cash. Read on to learn about studies that have shown this and possible explanations as to why this is the case.
valuepenguin.com
Now, coming to the specific case of India, in the latest Union Budget, the government mooted zero MDR for Merchants above a certain size (I think it was INR 50 crores revenues per year). So, Cost, which was one of the two traditional hurdles to accepting Digital Payments, was removed by the government.
Now, there’s some confusion about whether #ZeroMDR has been implemented or not subsequently.
Ketharaman Swaminathan@s_ketharamanWhat more slash now? During budget, it was slashed to zero, no? #ZeroMDR https://twitter.com/medianama/status/1173561487761317888 …
MediaNama.com?@medianama
NPCI slashes MDR for BHIM UPI and RuPay Debit cards https://www.medianama.com/2019/09/223-npci-reduces-mdr/ …
If #ZeroMDR has been implemented, then YES, there’s a strong case for the government to impose a fine if a Merchant (above the said size) does not accept (at least) one Digital Payment. (For the moment, I’ll ignore that argument that, if there’s no MDR, PSPs will have no incentive to issue Merchant Accounts, thus increasing their efforts to accept Digital Payments.)
If #ZeroMDR has not been implemented, then NO, there should be no fine on Merchants for refusing Digital Payments.