Indian Traders Protest New UPI Merchant Discount Rate Charges

The National Payments Corporation of India (NPCI) will implement a new Merchant Discount Rate (MDR) framework for Unified Payments Interface (UPI) transactions starting October 15. The policy introduces a 0.4% MDR on person-to-merchant payments exceeding Rs 2,000, capped at Rs 300 for transactions of Rs 75,000 and above. While person-to-person transfers and smaller merchant payments remain free, fuel and railway sectors will face a flat Rs 5 fee for qualifying transactions.

In response, traders across Madhya Pradesh observed a symbolic 'No UPI Day' on September 23 and 24, covering QR codes with black cloth and requesting cash. Organized by the Ahilya Chamber of Commerce and Industry, the protests spread through cities including Indore, Bhopal, Gwalior, and Jabalpur. Trade leaders argue the surcharge increases business costs and will drive inflation. Further nationwide protests are planned for October 2, supported by the Federation of Retail Traders Welfare Association and other trade bodies. Some merchants have threatened to immerse QR machines in water if the charges are not withdrawn.

NPCI CEO Dilip Asbe defended the move as necessary to fund cybersecurity, AI, and infrastructure after six years of zero MDR, estimating a first-year recovery of Rs 13,000-15,000 crore. The Ministry of Finance of India clarified that customers will not be charged the fee. Meanwhile, the All India Petroleum Dealers Association has petitioned Finance Minister Nirmala Sitharaman for an exemption, arguing that fixed margins make the flat fee unsustainable for fuel retailers.