Winning Bizness Desk

Mumbai.Traders announce No UPI Day on October 2 over new 0.4% MDR on payments above ₹2,000

Traders and shopkeepers across India will observe October 2 as “No UPI Day” to protest the new Merchant Discount Rate (MDR) on certain UPI payments above ₹2,000. The protest has been called ahead of the new framework taking effect from October 15, under which eligible large merchants will pay 0.4% MDR on person-to-merchant transactions above the threshold.

The participating traders plan to cover UPI QR codes, scanners, sound boxes and other digital payment devices with black cloth on October 2. Maharashtra Chamber of Commerce, Industry and Agriculture (MACCIA) president Ravindra Mangave said the protest would not remain confined to Maharashtra and that more than 500 major trader organisations across the country would participate.

Major trader bodies back October 2 protest

The campaign has received support from several large trade organisations representing retailers, distributors, mobile dealers, jewellers and edible-oil traders. The organisations have objected to the additional cost that eligible merchants will have to bear when the new MDR framework comes into force.

• All India Consumer Products Distributors Federation (AICPDF)
• Federation of Retail Traders Welfare Association (FRTWA)
• All India Mobile Retailers Association (AIMRA)
• All India Jewellers and Goldsmith Federation (AIJGF)
• All India Edible Oil Traders Federation (AIEOTF)

Traders cite margins and digital payment costs

Trader bodies have said retailers and distributors often operate on relatively low margins and that an additional payment-processing cost will increase their operating expenses. They have also argued that merchants have supported the shift towards digital payments and reduced dependence on cash. Their demand is that the new MDR framework be withdrawn or reconsidered. The protest groups have said they will intensify their campaign if the decision is not reviewed.

New MDR rules will apply from October 15

Under the framework announced by the National Payments Corporation of India (NPCI), a 0.4% MDR will apply to eligible person-to-merchant UPI payments above ₹2,000 from October 15. The charge is paid by the merchant, not the customer. Payments of ₹2,000 or less will remain free of MDR for large merchants, while small merchants receiving up to ₹1 lakh a month through UPI QR payments will remain exempt, even when an individual payment exceeds ₹2,000.

The main rules include:

• The MDR is capped at ₹300 for transactions of ₹75,000 or more.
• The ₹2,000 threshold applies to each transaction, not the merchant’s total daily sales.
• Small merchants crossing ₹1 lakh in monthly UPI collections can be moved into the large-merchant category under the prescribed classification.
• The customer will continue to pay only the bill amount; banks have been advised not to pass the MDR on to customers.

Essential services get a separate flat-rate structure

Certain sectors will not follow the standard 0.4% MDR structure. Fuel, railway, telecom, insurance and bill-payment transactions above ₹2,000 will attract a flat ₹5 MDR under the special category. The framework also keeps person-to-person UPI transfers outside the merchant charge. This means sending money to family, friends or other individuals will not attract the new merchant fee.

Customers have alternatives if shops stop UPI

Consumers planning purchases on October 2 may have to use other payment methods at participating outlets. The available options include:

• Cash payments, which traders are expected to accept during the protest.
• Debit or credit cards through swipe or tap payments.
• Net banking or NEFT for larger purchases and direct bank transfers.
• Cheques, which can also be used for payments where accepted.

The protest is directed at the merchant charge and does not mean UPI will become chargeable to consumers. The new framework specifically keeps customer payments free, while eligible merchants bear the MDR.

MDR is a merchant fee, not a customer charge

Merchant Discount Rate is the fee paid by a merchant to the banking and payment ecosystem for processing a digital payment. It is commonly associated with card payments and payment-processing infrastructure. Under the new UPI framework, the 0.4% MDR on eligible transactions is intended for the payment chain rather than being collected directly from customers.

For merchants, the difference will become visible from October 15. A ₹10,000 eligible UPI payment would attract an MDR of ₹40 before applicable GST, while a payment of ₹75,000 or more would have a maximum MDR of ₹300. The October 2 “No UPI Day” is therefore being used by trader organisations to register their opposition before the new system takes effect.