Some business associations have decided to hold a day of boycott of UPI (Unified Payments Interface) on October 2. This step is aimed at protesting the decision by the National Payments Corporation of India (NPCI) to introduce a Merchant Discount Rate (MDR) of 0.4 percent on payments to sellers via UPI exceeding ₹2000, starting from October 15.
Organizations confirming participation in the action include the Maharashtra Chamber of Commerce and Industry, the Food Federation of Consumer Distributors of India, the All India Union of Edible Oil Traders, the Federation of Jewelers and Gold Holders of India, the Association of Mobile Retailers of India, and the Federation of Retail Traders Welfare Associations. They plan to participate on October 2.
Ravindra Mangave, President of MCCIA, stated at a press conference in Mumbai that MCCIA has about 500 affiliated associations. He reported that they discussed the issue with all trade associations in India and unanimously decided to support the UPI boycott day not only in Maharashtra but also in other states. He added that representatives of organizations such as the Federation of Retail Traders Welfare Associations, the Food Federation of Consumer Distributors of India, the Association of Mobile Retailers of India, the Federation of Jewelers and Precious Metals of India, and the All India Union of Edible Oil Traders will join MCCIA and about 500 Maharashtra associations for this day. These associations intend to meet with the Prime Minister and voice their demands, while at the central level, present them to the Finance Minister.
MDR is a commission that a seller pays for accepting digital payments. UPI transactions between individuals are not subject to a fee. However, UPI transactions from an individual to a seller exceeding ₹2000 will be subject to a 0.4 percent fee starting October 15, capped at ₹300.
Payments to small sellers classified as P2PM will remain free from MDR. Such sellers include small traders receiving up to ₹1 lakh per month through UPI, which is particularly beneficial for businesses in rural and semi-urban areas. In August, UPI processed 15.51 billion person-to-merchant transactions totaling ₹8.95 trillion, with payments over ₹2000 accounting for about 67 percent of this amount.
Last week, senior officials from the Ministry of Petroleum and Natural Gas met with the All India Petroleum Traders Association to discuss the dealers' demand for exemption from MDR on UPI transactions. Tuhin Kanta Pandey, Chairman of the Securities and Exchange Board of India (SEBI), stated that the regulator would consider brokers' concerns regarding the new MDR for large fund transfers via UPI. The MDR rate for capital market transactions is set at 0.02 percent, with a limit of ₹300 for payments to mutual funds, brokers, dealers, and investment advisors.
Dayarishil Patil, national president of AICPDF, noted: 'Why should only traders bear the additional cost of digital payments? Retailers and distributors operate on very low margins and already contribute significantly to the growth of digital commerce. Introducing MDR on UPI transactions will only add another expense item to their business. Digital payments should reduce friction, not penalize the trader.'
Shankar Thakkar, national president of the All India Union of Edible Oil Traders, stated strong opposition among traders across the country to the government's proposed order introducing a 0.4 percent MDR charge on UPI transactions exceeding ₹2000 from October 15.
Various trade organizations across the country have decided to protest on Gandhi Day, October 2, following the example of Mahatma Gandhi: they plan to cover UPI scanners, QR codes, sound boxes, and other related devices with black cloth as a sign of protest. Thakkar warned that if the government does not take appropriate action on this matter, a strategy for further actions will be determined in the coming days, and protests will intensify.
He explained that the constantly growing use of UPI payments has made the entire retail payment chain more transparent. A customer makes a UPI payment to a seller, the seller makes a digital payment to the wholesaler when purchasing goods, and the wholesaler, in turn, makes an online payment to the manufacturer or supplier. This has reduced the circulation of cash and created an account of every transaction. Thakkar questioned: 'Is the cost of increasing system transparency being borne by small retailers? Introducing MDR for traders operating on low margins will effectively mean not promoting Digital India, but economically punishing honest businesses for conducting registered and transparent transactions.'
