Indian retailers have announced a nationwide "No UPI Day" on October 2 to protest the new merchant discount rate (MDR) on UPI payments, which will take effect from October 15. The new framework imposes a 0.4% MDR on person-to-merchant transactions above ₹2,000, capped at ₹300, ending the zero MDR regime that has been in place since 2020, according to inc42.com.
The Centre recently unveiled the MDR framework, stating that only 4% of merchant transactions would be affected. However, industry bodies representing retailers argue that the levy will erode margins and impose an annual cost burden of around ₹9,000 crore. Mobile phone retailers and FMCG distributors have expressed concerns that the MDR could squeeze working capital, encourage transaction splitting, and increase consumer prices during the festive season, inc42.com reported.
Retailers have opposed the new MDR regime, citing threats to business viability in sectors with thin margins. The Supreme Court refused to grant an interim stay on the MDR rollout, describing the issue as more technical than legal. The court has questioned whether the MDR constitutes a tax, fee, or commercial charge and has issued notices to the Centre, RBI, and NPCI seeking responses within four weeks, inc42.com said.
The Supreme Court's notices to key government and regulatory bodies are due within four weeks, setting a timeline for official responses on the MDR dispute. The nationwide "No UPI Day" protest on October 2 will serve as a critical moment for retailers to demonstrate their opposition to the new charges, inc42.com noted.