No UPI Day will be celebrated on October 2, as various trade and business associations have decided to launch an agitation against the MDR charges that will apply to some high-value UPI transactions. This agitation is being launched ahead of the implementation of the new UPI system from October 15, 2026.
In the revised model, an MDR of 0.4% would be levied for eligible merchant UPI transactions of more than ₹2,000. Trade organisations opine that this additional cost might pose problems for retailers and businesses that have small profit margins.
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| Image Credit: Indian Express |
Why Are Traders Planning No UPI Day?
Several trade organisations have stated that they will participate in No UPI Day on October 2. Some of the organisations participating in the event are the Maharashtra Chamber of Commerce, Industry & Agriculture, All India Consumer Products Distributors Federation, All India Mobile Retailers Association, All India Jewellers and Goldsmith Federation, and others.
As per the plan of protest, traders intend to cover the UPI QR codes and their scanners, along with sound boxes and other such instruments associated with payments, in black clothes. The protest is going to take place on October 2.
Trader representatives have argued that the new MDR will add another business expense. They say retailers and distributors often work with tight margins and may find it difficult to absorb an additional payment cost.
Some traders have also raised concerns that higher costs could encourage businesses to prefer cash payments for larger purchases. Reports from Delhi markets have already highlighted similar concerns among retailers ahead of the October 15 implementation date.
What Are the New UPI Charges?
This does not mean that all UPI payments will be charged. Starting October 15, an MDR of 0.4% will be levied on all eligible person-to-merchant (P2M) UPI transactions that exceed ₹2,000. Transactions amounting to more than ₹75,000 will carry an MDR cap of ₹300.
Person-to-person transfers will be free irrespective of the transfer amount. Likewise, merchant transactions below ₹2,000 will also continue to be free.
Zero-MDR will still apply for small businesses included in this zero-MDR model. It has been stated by the government that about 96% of merchant UPI transaction amounts will not be affected by the new model.
Who Actually Pays the MDR?
The first aspect of the new system is that MDR is a fee levied on merchants rather than a customer fee. The Ministry of Finance has specified that the MDR is neither a government tax nor a fee collected by the government or NPCI. This fee is distributed among the parties in the payments ecosystem, which includes the banks and payment application providers.
In addition, the government has also told the banks to make sure that merchants should not impose the MDR cost on the customer. Person-to-person transactions via UPI will still be free of cost.
Why Has the Issue Become Controversial?
The main disagreement is about who should bear the cost of maintaining and expanding the UPI payment ecosystem. Trader organisations argue that digital payments have become an important part of everyday business, and adding MDR could increase their operating expenses. Some associations have therefore called for the proposed charges to be reconsidered.
The government's position is different. According to the Finance Ministry, the new framework is intended to support the long-term sustainability of the UPI ecosystem while protecting individuals and small merchants from additional charges. Since MDR applies only to specified merchant transactions above the threshold, the government says the vast majority of merchant transactions will continue without MDR.
The debate has also reached other sectors. Business Standard reported that concerns have been raised by petroleum dealers and stockbrokers about how the new MDR framework would apply to their transactions.
What Will Happen on October 2?
The planned No UPI Day will take place before the new MDR framework comes into effect on October 15. Participating traders are expected to display their opposition by covering UPI payment devices with black cloth. The participating organisations have said that further action could be considered if their concerns are not addressed.
For consumers, however, the protest does not mean that UPI will stop working on October 2. The proposed protest is being organised by participating traders and business associations, while UPI itself will continue to operate.
Conclusion
The No UPI Day protest has been held due to the upcoming 0.4% MDR on eligible UPI merchant payments that exceed ₹2,000. According to the traders' association, this may cause business costs to be higher; however, the government says that all P2P payments and most merchant payments will stay free.
With the new system being set to begin on October 15, it seems probable that the protests on October 2 will ensure that discussion of UPI charges continues.