Trade Bodies Plan ‘No UPI Day’ on October 2 to Protest New MDR Levy

Traders and business associations across India are preparing to observe a “No UPI Day” on October 2, protesting the merchant discount rate (MDR) that is set to apply to certain UPI merchant payments from October 15. 

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

As part of the protest, participating traders plan to cover UPI scanners, QR codes, sound boxes and other payment devices with black cloth on Gandhi Jayanti. 

The protest centres on the 0.4% MDR that will apply to peer-to-merchant UPI transactions above ₹2,000. The charge will be capped at ₹300 per transaction. 

Business associations join October 2 protest 

The Maharashtra Chamber of Commerce, Industry & Agriculture (MACCIA) has called for October 2 to be observed as “No UPI Day”. 

Several trade organisations have joined the initiative, including the Federation of Retail Traders Welfare Association, All India Consumer Products Distributors Federation, All India Mobile Retailers Association, All India Jewellers and Goldsmith Federation, and the All India Edible Oil Traders Federation. 

MACCIA has around 500 affiliated associations. Its president, Ravindra Mangave, said discussions had taken place with trader associations outside Maharashtra as well. 

The chamber and its affiliated associations also plan to meet the Maharashtra chief minister to put forward their demands. 

What changes from October 15 

MDR is the fee paid by a merchant for accepting a digital payment. 

Under the new structure covered in the report, peer-to-peer UPI transactions will continue without a fee. Peer-to-merchant transactions above ₹2,000 will attract an MDR of 0.4%, subject to a maximum charge of ₹300. 

Payments to small vendors falling under the person-to-person-merchant, or P2PM, category will remain free from MDR. 

The P2PM category covers small vendors receiving up to ₹1 lakh per month through UPI, including businesses operating in rural and semi-urban areas. 

UPI merchant transactions worth ₹8.95 trillion in August 

The scale of UPI’s use in merchant payments is significant. 

During August, the platform processed 15.51 billion person-to-merchant transactions with a combined value of ₹8.95 trillion. 

Transactions above ₹2,000 accounted for around 67% of that value. 

Trade bodies opposing the charge have raised concerns about the additional cost for retailers and distributors operating on relatively thin margins. Their argument is that the growing use of digital payments has already shifted a substantial part of the retail payment chain away from cash and towards recorded transactions. 

Other industries have raised MDR concerns 

The debate over the new charge has also reached other sectors. 

Senior officials from the Ministry of Petroleum and Natural Gas met the All India Petroleum Dealers Association last week to discuss its demand for an exemption from MDR on UPI transactions. 

Concerns have also been raised by stockbrokers over MDR on larger UPI-based fund transfers. 

For capital-market transactions, the MDR has been set at 0.02%, capped at ₹300, for payments made to mutual funds, brokers and dealers, and investment advisers. Securities and Exchange Board of India Chairperson Tuhin Kanta Pandey had indicated that the regulator would examine the concerns raised by brokers. 

Traders plan symbolic protest on Gandhi Jayanti 

The October 2 action is planned as a symbolic protest rather than a change to the UPI system itself. 

Participating businesses intend to cover their UPI-related payment devices with black cloth for the day to register their opposition to the charge. 

Trade representatives cited in the report have also indicated that further action could be considered depending on the response to their concerns. 

For now, the focus remains on October 2, less than two weeks before the 0.4% MDR on qualifying UPI merchant transactions is scheduled to take effect on October 15.