Indian retailers protest new UPI payment charges

Indian retailers have announced a "No UPI Day" on October 2 in protest against new charges levied on transactions made through the Unified Payments Interface (UPI). While UPI payments under Rs 2,000 (approximately $24) will remain free for consumers, merchant discount rates (MDR) will now be applied to transactions exceeding this threshold.

The All India Mobile Retailers Association (AIMRA) has called on its members to cover their UPI QR codes with black cloth as a sign of protest. Five other trade bodies have joined the movement. Retailers argue that UPI acceptance should be incentivized rather than taxed, likening the new charges to a tax.

MDR is a fee merchants pay on digital payments they receive, shared between banks and payment apps. From October 15, merchants will incur MDR on certain UPI payments above Rs 2,000. While the regulation aims to cover the costs of the UPI ecosystem, retailers contend that the new structure creates disparities across different sectors.

The new fee structures vary by sector. For payments over Rs 2,000, a 0.4% charge of the transaction value, capped at Rs 300 (approximately $3.60), will apply. For railways, telecom, insurance, and fuel, the fee is a flat Rs 5 per transaction above Rs 2,000. Stockbrokers and mutual fund transactions face a 0.02% fee, capped at Rs 300. Small merchants receiving less than Rs 1 lakh (approximately $1,200) monthly via UPI are exempt.