Business associations across India are planning a coordinated protest against the National Payments Corporation of India’s plans to introduce a 0.4% merchant discount rate on high-value UPI transactions, signalling potential disruption to digital payments and retail trade.
Business associations across India are preparing a coordinated protest against the National Payments Corporation of India’s plan to apply a 0.4% merchant discount rate on certain UPI payments above Rs 2,000 from October 15, with several trader bodies due to observe a “No UPI Day” on October 2.
The Maharashtra Chamber of Commerce, Industry & Agriculture, the All India Consumer Products Distributors Federation, the All India Edible Oil Traders Federation, the All India Jewellers and Goldsmith Federation, the All India Mobile Retailers Association and the Federation of Retail Traders Welfare Association are among the groups that have said they will take part, according to Business Standard. Ravindra Mangave, president of the Maharashtra chamber, said at a press conference in Mumbai that hundreds of affiliated trade bodies in Maharashtra would join the protest and press their demands with both state and central authorities.
Under the proposed structure, peer-to-peer UPI transfers will remain free, but person-to-merchant payments above Rs 2,000 will attract the fee, capped at Rs 300. Small vendors classified as person-to-merchant merchants and receiving up to Rs 1 lakh a month through UPI will also be exempt, a carve-out that matters particularly for businesses in rural and semi-urban areas. In August, UPI handled 15.51 billion person-to-merchant transactions worth Rs 8.95 trillion, with payments above Rs 2,000 accounting for roughly 67% of the total value.
Traders say the charge would land on businesses with very slim margins and undermine the spread of digital payments. Dhairyashil Patil, national president of the consumer products distributors federation, said retailers and distributors already help drive digital commerce and should not be asked to absorb more cost. Shankar Thakkar, national president of the edible oil traders federation, said there was widespread opposition among traders to the levy and warned that if the government did not change course, the protest would escalate.
The planned action is likely to include symbolic steps such as covering UPI scanners, QR codes and sound boxes with black cloth, echoing the Gandhian symbolism associated with October 2, Gandhi Jayanti. The issue has already spilled beyond retail trade: petroleum dealers have raised concerns with the Ministry of Petroleum and Natural Gas, while Sebi chairman Tuhin Kanta Pandey has said the market regulator will examine objections from brokers over the new charge on large UPI fund transfers. For capital-market transactions, the MDR has been set at 0.02%, subject to a Rs 300 ceiling, for payments to mutual funds, brokers, dealers and investment advisers.
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