UPI’s ₹500-Crore Cost Sparks Retail Revolt, Mobile Sellers Plan ‘No UPI Day’

New Delhi: Mobile phone retailers across India will observe October 2 as ‘No UPI Day’, protesting the introduction of a 0.4 percent Merchant Discount Rate (MDR) on eligible UPI transactions and warning that the levy could significantly squeeze margins of small retailers.

The All India Mobile Retailers Association (AIMRA) has called for the symbolic protest on Gandhi Jayanti, seeking continuation of the Zero MDR framework for merchant UPI payments.

QR Codes To Go Under Black Cloth

As part of the protest, participating mobile retailers will symbolically cover their UPI QR codes with black cloth and refrain from accepting UPI payments on October 2.

AIMRA Vice President and Delhi-NCR President Tarvinder Singh said the action is intended to highlight retailers' concerns over the 0.4 percent MDR applicable to eligible merchant transactions.

The government has introduced a 0.4 percent charge on eligible UPI merchant transactions exceeding Rs 2,000 from October 15. Person-to-person transfers and small payments remain exempt.

Retailers Flag Margin Pressure

In a representation to Finance Minister Nirmala Sitharaman, AIMRA said the MDR could result in an immediate monthly hit of around Rs 2,000 to Rs 12,000 for a small retailer processing Rs 5 lakh to Rs 30 lakh through UPI every month.

The association argues that such costs could erode a substantial portion of retailers' earnings, particularly in the mobile phone business where margins can be tight.

Rs 500 Crore Annual Burden

AIMRA estimates the 0.4 percent MDR could collectively cost small mobile retailers around Rs 40 crore every month, translating into nearly Rs 500 crore annually.

Singh stressed that the campaign is not against UPI or the government's Digital India push.

Instead, AIMRA wants digital payments to remain affordable for merchants and has urged the government to retain the Zero MDR structure for UPI merchant transactions.

The association maintains that keeping transaction costs low will encourage retailers to continue promoting digital payments among consumers.