‘No UPI Day’ protest called off: What mobile retailers demanded over 0.4% MDR on UPI payments

The proposed ‘No UPI Day’ protest on October 2 has been called off, with mobile retailers and consumer product distributors withdrawing the agitation after a delegation met Union Finance Minister Nirmala Sitharaman over the proposed Merchant Discount Rate (MDR) on high-value UPI transactions.

The All India Mobile Retailers Association (AIMRA) and the All India Consumer Products Distributors Federation (AICPDF) had planned the protest against the proposed 0.4 per cent MDR on UPI transactions above Rs 2,000, arguing that the charge could add to the costs of small retailers operating on already thin margins.

The decision to withdraw the protest came after a delegation representing the trade bodies met Sitharaman and submitted a joint representation outlining their concerns and proposed changes to the MDR framework.

What did the retailers demand?

The trade bodies sought deferment of the proposed MDR, along with a phased rollout rather than introducing the full 0.40 per cent charge immediately.

Under their proposal, the MDR could begin at 0.20 per cent in 2026-27 and rise by 0.05 percentage points every year until reaching 0.40 per cent.

The associations also called for changes to the proposed threshold at which MDR would apply. They sought an increase in the Rs 1 lakh threshold to Rs 5 lakh, saying this would better reflect the transaction patterns of merchants.

Another key demand was the exemption of merchant-to-merchant (M2M) transactions from MDR. The trade bodies also asked for an expert committee to examine the concerns raised by retailers and distributors before the proposed charges are implemented.

How could the demands help retailers?

The proposed changes are aimed at reducing the immediate financial impact of MDR on merchants.

A phased introduction, beginning at 0.20 per cent instead of 0.40 per cent, would mean a lower charge in the initial year. Raising the threshold from Rs 1 lakh to Rs 5 lakh would also limit the number of merchants and transactions affected by the proposed MDR, according to the trade bodies' representation.

The exemption sought for M2M transactions would further keep business-to-business payments outside the proposed charge, while the proposed expert committee would give retailers and distributors a formal platform to raise concerns about how the MDR system could affect their operations.

Will the MDR affect customers?

The proposed MDR is a charge on merchants, not customers. This means customers would not be directly charged the 0.4 per cent MDR when making eligible UPI payments. The concern raised by AIMRA and AICPDF is about the additional cost for retailers and distributors, particularly smaller businesses operating on thin margins.

Why was the No UPI Day protest planned?

AIMRA had earlier announced the October 2 protest over the proposed MDR, saying the charge could put additional pressure on micro, small and medium enterprises, shopkeepers and independent retailers that depend on digital payments for everyday business.

The association had described retailers' profit margins as already thin and argued that an additional transaction cost could further affect their earnings.

Following the meeting with Sitharaman, the delegation said the Finance Minister had heard its concerns and assured the representatives that the issues would be considered and addressed.

The assurance was followed by the decision of AIMRA and AICPDF to withdraw the October 2 ‘No UPI Day’ protest.

With PTI inputs