‘No UPI Day’: Mobile, FMCG Retailers To Protest UPI MDR On October 2

Indian retail traders are gearing up for a nationwide protest against the proposed UPI MDR soon. The All India Mobile Retailers Association (AIMRA) and The All India Consumer Products Distributors Federation (AICPDF) have called for a “No UPI Day” on October 2 (Friday). 

The AIMRA has called on mobile retailers across India to temporarily halt accepting UPI payments on October 2. Meanwhile, AICPDF has announced full support for the protest, saying its network of around 4.5 Lakh distributors and 1.3 Cr retailers will participate in the protest.

AIMRA is seeking a fixed, nominal charge for digital transactions, similar to the model followed for certain payments such as railway bookings and petrol pumps, instead of the proposed 0.4% MDR. The association believes that the proposed MDR could disproportionately hit retailers operating with limited margins. 

Speaking to PTI, Tarvinder Singh, vice president and president for  AIMRA’s Delhi NCR wing, reportedly said that retailers will symbolically cover their UPI QR codes with black cloth and refrain from collecting payment via UPI. 

“We fully support digital India, but digital transactions must come with fair, rational, and sustainable charges… ​Our clear demand: Fair MDR or Zero MDR,” the association said in a X post.

Meanwhile, AICPDF estimates that the proposed MDR could create an additional annual cost burden of ₹7,000 Cr-₹9,000 Cr across the FMCG distribution and retail ecosystem. This, it believes, can pose a significant burden for the sector.

“We are not against UPI or digital payments. UPI has become an important part of India’s business ecosystem, and our trade has embraced it extensively. Our concern is the cumulative economic impact of MDR on a distribution system that operates on very thin margins,” said AICPDF national president Dhairyashil H. Patil.

MDR At The Doorstep

The MDR debate gained momentum earlier this month after the finance ministry introduced a new framework which allows a 0.4% MDR on specified P2M UPI transactions above ₹2,000, capped at ₹300 for transactions of ₹75,000 and above. It is set to come into effect from October 15.

The move marks a shift from the zero-MDR regime that has applied to UPI since January 2020 for transactions covered by the earlier framework. 

The government has said the new charge will apply to only around 4% of merchant transactions, with payments up to ₹2,000, P2P transfers and eligible small-merchant transactions remaining free.

Businesses in the UPI ecosystem, including banks, payment companies, and TPAPs, have lauded the move as the framework unlocks a new revenue stream for companies operating in the UPI ecosystem.

Under the standard 0.4% MDR structure, the merchant pays the acquiring bank, which passes 0.28% to the issuing bank as an interchange. Of the remaining 0.12%, the issuing bank pays 0.08% to the payer-side payment service provider, which then passes it on to the UPI app provider.

However, the proposed charges have triggered a wider debate over their impact on merchants, businesses and consumers. Retailer groups have warned that the MDR could discourage UPI acceptance, particularly as festive-season transactions often exceed ₹2,000. 

Fuel dealer associations have also sought government intervention over higher payment processing costs. Meanwhile, brokers and investment platforms such as Zerodha and INDmoney have raised concerns about charges on transactions that may not generate corresponding trading revenue. 

Shortly after the proposal, a petition was filed in the Supreme Court which challenged the framework, arguing that merchants could indirectly pass on the cost to consumers through higher prices.

As of now, the apex court has temporarily refused to stay the new MDR framework for specified UPI person-to-merchant (P2M) transactions above ₹2,000. As of now, it has sought responses from the Centre, the RBI and the NPCI on the plea challenging the framework, with the respondents given four weeks to file their replies. 

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