Is there a ‘No UPI Day’ tomorrow? Here’s what you need to know

Trader organisations are divided over the proposed ‘No UPI Day’ on October 2, with some groups backing a symbolic boycott of UPI payments while the Confederation of All India Traders (CAIT) says it has not called for or endorsed the observance.

A proposed ‘No UPI Day’ on October 2 has triggered differences among trader organisations over the new Merchant Discount Rate (MDR) framework for certain merchant UPI transactions.

The campaign is being backed by some trade and retail bodies, including the Chamber of Trade and Industry (CTI), Delhi, and the All India Mobile Retailers Association (AIMRA). However, CAIT has clarified that it has neither called nor endorsed a nationwide ‘No UPI Day’.

The proposed protest is linked to a 0.4 per cent MDR on specified merchant UPI transactions above Rs 2,000, which is scheduled to take effect from October 15.

Why are traders observing ‘No UPI Day’?

Trade organisations supporting the campaign have raised concerns about the financial impact of MDR on merchants, particularly small businesses and retailers operating on relatively thin margins.

CTI has asked participating traders to cover UPI machines, QR codes and sound boxes with black cloth on October 2 and accept cash payments instead.

The organisation has claimed that more than 100 major trader organisations could support the campaign, with participation potentially extending to more than 2,000 locations.

AIMRA has also opposed the proposed MDR and said it could increase costs for mobile retailers. The association has estimated an additional burden of around Rs 40 crore a month for small mobile retailers, although this is an industry estimate rather than an independently established figure.

CAIT says it has not called for a nationwide protest

The Confederation of All India Traders has taken a different position.

CAIT has said it has not passed any resolution or issued any official call for observing ‘No UPI Day’ on October 2.

This means the observance should not be interpreted as a nationwide shutdown of UPI services.

Individual traders, shops and regional associations may decide independently whether to stop accepting UPI payments as part of the protest.

Will UPI stop working on October 2?

No. There is no indication of a nationwide suspension of the UPI payment system on October 2.

The proposed observance is a merchant-level protest, meaning participating businesses may choose not to accept UPI payments temporarily.

Customers could therefore be asked to pay in cash at some participating shops, while UPI services themselves will continue to operate.

What is the proposed UPI MDR?

Under the new framework described by the government, a 0.4 per cent MDR will apply from October 15 to specified merchant UPI transactions above Rs 2,000.

Key provisions include:

• 0.4 per cent MDR on specified eligible merchant UPI transactions above Rs 2,000.
• Person-to-person transactions remain outside the charge.
• Eligible transactions below the specified threshold remain exempt.
• MDR will be capped at Rs 300 for transactions of Rs 75,000 and above.

Railways, telecom, insurance, fuel and agricultural inputs will attract a flat Rs 5 MDR on eligible transactions above Rs 2,000.

Mutual funds, securities, stockbrokers and dealers will attract an MDR of 0.02 per cent, subject to a maximum of Rs 300.

The MDR is a charge within the merchant-payment ecosystem and is not described by the government as a direct tax imposed on consumers.

Why is the Supreme Court examining the issue?

The proposed MDR framework is also facing a legal challenge.

The Supreme Court has sought responses from the Centre, the Reserve Bank of India and the National Payments Corporation of India on the legal basis for imposing MDR on specified merchant UPI transactions.

The court has also sought clarity on who would receive the charges and how the money would be distributed.

A petition filed by advocate Anjan Datta challenges the Centre's September 14 notification and the framework announced on September 15. The petition alleges that the levy was introduced without adequate statutory safeguards, transparency and public consultation.

The petitioner has sought the quashing or suspension of the framework. Alternatively, the plea seeks a fresh review involving consultation, empirical data, an impact assessment and safeguards for micro and small enterprises.

The Supreme Court declined to grant an immediate interim stay and will consider the matter after the concerned authorities file their responses.

The October 2 campaign does not mean that UPI will be unavailable across India.

Consumers may encounter different payment arrangements depending on the shop or market they visit. Participating traders may temporarily refuse UPI payments and ask customers to pay in cash.

For this reason, people planning to shop at participating establishments on October 2 may want to carry an alternative payment method.

What the ‘No UPI Day’ dispute means

The dispute reflects a difference between merchant-level opposition to MDR and the operation of the UPI network itself.

CAIT's clarification is important because it means there is no single nationwide trader mandate to stop accepting UPI on October 2. At the same time, organisations such as CTI and AIMRA have announced their own participation, meaning the experience could differ between businesses and locations.

The legal position is also still developing. The Supreme Court has sought information from the relevant authorities but has not yet issued a final ruling on the legality of the MDR framework.

The immediate issue for consumers on October 2 is therefore not whether UPI will be switched off, but whether individual merchants participating in the protest will accept UPI payments.

The larger issue is whether the proposed MDR structure will change the cost economics of merchant UPI payments after years of zero-MDR transactions and how the charges will affect merchants, payment providers and the wider digital payments ecosystem.