No UPI Day on October 2: Mobile retailers protest proposed 0.4% MDR on UPI payments

Mobile phone retailers across India will observe October 2 as "No UPI Day" to protest the proposed 0.4% Merchant Discount Rate (MDR) on certain UPI merchant transactions above ₹2,000. The protest has been called by the All India Mobile Retailers Association (AIMRA), which has raised concerns over the impact of the proposed charges on retailers.

Under the new UPI MDR framework, a 0.4% charge will apply from October 15, 2026, to specified person-to-merchant UPI transactions above ₹2,000. Person-to-person payments and merchant transactions up to ₹2,000 will remain outside the charge framework.

Why are mobile retailers observing 'No UPI Day'?

AIMRA said the October 2 protest is intended to highlight the concerns of mobile retailers over the additional cost associated with accepting eligible UPI payments.

AIMRA Vice President and Delhi-NCR President Tarvinder Singh said the association wants merchant UPI payments to continue under the existing zero-MDR structure.

As part of the protest, retailers are expected to cover their UPI QR codes with black cloth and refrain from accepting UPI payments on Gandhi Jayanti.

The mobile retailers' body has argued that the proposed MDR could put pressure on the margins of small retailers. Business Standard reported that the association estimates the 0.4% charge could create a financial burden of around ₹40 crore per month, or nearly ₹500 crore annually, for small mobile retailers across India.

When will the new UPI charges come into effect?

The revised MDR framework is scheduled to take effect on October 15, 2026.

The 0.4% MDR will apply to specified person-to-merchant UPI payments above ₹2,000. The charge will be borne by merchants rather than consumers, and banks have been advised to ensure that it is not passed on to customers.

The MDR will also be capped at ₹300 for transactions of ₹75,000 or more. Small merchants receiving up to ₹1 lakh a month through eligible UPI QR transactions will continue to receive zero-MDR treatment.

Will customers have to pay for UPI?

No. The proposed MDR is a merchant-side charge, and customers are not expected to pay an additional fee for making eligible UPI payments.

Person-to-person UPI transfers will remain free irrespective of the transaction amount, while merchant payments up to ₹2,000 will also remain outside the MDR framework.

The government has also clarified that the proposed MDR revenue will not go directly to the government. Instead, the revenue will be distributed among entities involved in the UPI payment ecosystem, including banks, payment gateways and UPI applications.

Not all UPI transactions will attract 0.4% MDR

The revised framework does not impose a blanket 0.4% charge on every UPI payment above ₹2,000.

Certain sectors have separate rates. Transactions involving essential categories such as railways, telecom, fuel and insurance will attract a flat ₹5 fee above the applicable threshold. Certain capital-market transactions, including mutual funds and stockbroking payments, will have a lower MDR of 0.02%, subject to the applicable cap.

CAIT distances itself from nationwide 'No UPI Day' call

The protest by mobile retailers should also be distinguished from the position of the Confederation of All India Traders (CAIT).

CAIT had earlier denied reports that it had called for or endorsed a nationwide "No UPI Day" on October 2, describing such reports as misleading. The organisation said individual trade organisations and regional bodies could independently announce protests, but such initiatives should not be attributed to CAIT. The October 2 protest by AIMRA therefore specifically reflects the position of mobile retailers represented by the association.

What does this mean for customers?

Customers visiting participating mobile stores on October 2 may be asked to use cash or another available payment method instead of UPI. The protest is scheduled for Gandhi Jayanti and is intended by the retailers to draw attention to their concerns before the new MDR framework takes effect on October 15.

The development comes amid a broader debate over the future funding and sustainability of India's rapidly expanding digital payments ecosystem, with retailers raising concerns about the impact of transaction charges on their businesses.