Kolkata: Come October 2 and those purchasing mobile phones, accessories and related products or services at retail stores may face difficulties making
UPI payments for that day. Mobile retailers have decided to observe a ‘No UPI Day’ in protest against the proposed 0.4% Merchant Discount Rate (MDR) on UPI transactions. This protest coincides with the government’s move to revise the zero-MDR framework that has governed UPI payments for approximately six years. The new rules stipulate that merchants have to pay charges for transfers exceeding ₹2,000 starting October 15. However, peer-to-peer (P2P) UPI transfers and payments made to small merchants will remain free of charge, just as before. Also merchants cannot pass on the additional 0.4% charge to their customers.
Why are mobile retailers protesting?
According to reports, this protest has been called by the ‘All India Mobile Retailers Association’ (AIMRA). The association has expressed concern that the imposition of a Merchant Discount Rate (MDR) on specific UPI payments could place an additional burden on mobile retailers. Tarvinder Singh, vice president of AIMRA and president for the Delhi-NCR region, stated that retailers would cover their UPI QR codes with black cloth on Gandhi Jayanti and would not accept UPI payments.
Demand to remove MDR
“If we want a Digital India, the MDR on UPI must remain at zero. This is not a protest against UPI or Digital India. Our concern is regarding the additional financial burden on merchants who accept digital payments. If we want Digital India to progress further, digital payments must remain affordable for the entire retail ecosystem,” a top executive from the industry body has been quoted as saying according to reports. Singh stated that AIMRA’s clear demand is that UPI merchant payments should continue under a zero-MDR structure.
On September 25, Union finance minister Nirmala Sitharaman clarified that the new 0.4% MDR applicable to specific UPI merchant payments exceeding ₹2,000 would have to be borne by the merchants, not the customers. She also said earlier, “I do not think customers need to worry, because we are clearly stating that the burden will not fall on the consumer. Of course, I regret to say that some people have not understood this correctly. It is not on the consumer.”
Impact on retailer earnings
AIMRA has submitted to the finance minister that the 0.4% MDR on UPI payments could result in a monthly loss of ₹2,000 to ₹12,000 for small retailers who process UPI transactions ranging from ₹5 lakh to ₹30 lakh per month. The association stated that this could wipe out a significant portion of their net income. The mobile retailers’ body estimates that a 0.4% MDR would impose a financial burden of approximately ₹40 crore per month—and around ₹500 crore annually—on small mobile retailers across India, a cost that would be difficult to absorb.
