Mobile phone retailers across India will observe October 2 as “No UPI Day” to protest the proposed 0.4 per cent Merchant Discount Rate (MDR) on specified high-value UPI merchant transactions, the All India Mobile Retailers Association (AIMRA) said.
The campaign, scheduled for Gandhi Jayanti, will see participating retailers temporarily stop accepting UPI payments and cover their UPI QR codes with black cloth as a symbolic protest.
AIMRA Vice President and Delhi-NCR president Tarvinder Singh said the initiative was intended to highlight concerns among mobile retailers over the financial impact of the new MDR framework.
“The All India Mobile Retailers Association (AIMRA) has called for a ‘NO UPI DAY’ on October 2, 2026, to highlight the concerns of mobile retailers regarding the 0.4 per cent Merchant Discount Rate (MDR) applicable to eligible merchant UPI transactions,” Singh said in a statement.
Retailers seek continuation of zero-MDR regime
The new framework, which takes effect from October 15, provides for a 0.4 per cent MDR on specified person-to-merchant UPI transactions above ₹2,000. Person-to-person payments and merchant transactions up to ₹2,000 will remain free.
The government has also said eligible small merchants receiving up to ₹1 lakh a month through UPI QR codes under the person-to-person-merchant category will continue to receive zero-MDR treatment. Overall, it estimates that about 96 per cent of person-to-merchant UPI transactions will remain unaffected.
The MDR will be capped at ₹300 for transactions of ₹75,000 or more. Certain essential and thin-margin sectors, including railways, telecommunications, insurance, fuel and agricultural inputs, will instead attract a flat ₹5 MDR for transactions above ₹2,000. Payments involving mutual funds, securities, stockbrokers and dealers will attract a 0.02 per cent MDR, capped at ₹300.
The government has clarified that MDR is not a tax or a fee collected by the government or the National Payments Corporation of India. It will be distributed among participants in the payments ecosystem, including banks and payment application providers. The Centre has also said customers will not bear the charge.
AIMRA, however, wants mobile merchant transactions to continue under the earlier zero-MDR structure, arguing that the new levy would put pressure on retailers operating on relatively narrow margins.
AIMRA estimates ₹500 crore annual burden
In a representation to Finance Minister Nirmala Sitharaman, AIMRA estimated that the 0.4 per cent MDR would result in an immediate net monthly loss of between ₹2,000 and ₹12,000 for a small retailer processing ₹5 lakh to ₹30 lakh a month through UPI.
According to the retailers' body, this would remove a substantial portion of their net income. It estimates that the new MDR could impose a burden of around ₹40 crore every month, or nearly ₹500 crore annually, on small mobile retailers across India.
Singh said the campaign was not intended as opposition to UPI or the broader digital payments programme.
“If We Want Digital India, UPI Must Remain Zero MDR. This is not a protest against UPI or Digital India. Our concern is the additional financial burden being placed on merchants who accept digital payments,” he said.
“If we want Digital India to grow further, digital payments should remain affordable for the entire retail ecosystem. Our clear demand is that UPI merchant payments should continue under a Zero MDR structure,” Singh added.
Traders expand campaign against new UPI levy
The October 2 campaign extends beyond mobile retailers, with several business organisations also announcing plans to participate in a nationwide “No UPI Day”. The Maharashtra Chamber of Commerce, Industry & Agriculture, All India Consumer Products Distributors Federation, All India Edible Oil Traders Federation, All India Jewellers and Goldsmith Federation and Federation of Retail Traders Welfare Association have also confirmed participation, according to reports.
Similar protests have been announced by mobile retailers in states including Chandigarh, Bihar and Jharkhand, where retailers have said they will cover their QR codes and temporarily stop accepting UPI payments.
The new MDR marks a shift after nearly six years of zero-cost UPI merchant payments. The government says the framework is intended to support the long-term sustainability of the payments ecosystem as transaction volumes continue to rise.
The change has also triggered wider debate among businesses over who should bear the cost of sustaining UPI infrastructure. Reuters reported that PhonePe and Google Pay, which together account for about 80 per cent of UPI transaction value, could benefit significantly from the new revenue stream, while smaller payment platforms may focus more heavily on high-value transactions.
The Centre has said the MDR will remain a merchant-side charge and that payment providers and banks must not pass it on to consumers. It has also indicated that implementation will be monitored to ensure that customers are not charged.
For mobile retailers, however, the October 2 action is intended to underline their demand that UPI merchant payments remain free of MDR, particularly for businesses where a significant share of transactions exceed ₹2,000.