New Delhi: Mobile phone retailers across India are set to observe October 2 as a “No UPI Day”, temporarily stopping UPI payments and covering their QR codes in protest against the proposed Merchant Discount Rate (MDR) on certain high-value merchant transactions.

The nationwide protest has been called by the All India Mobile Retailers Association (AIMRA), which is seeking continuation of the zero-MDR system for merchant UPI payments. The protest comes ahead of the new MDR framework scheduled to take effect from October 15, 2026.

Under the new framework, a 0.4% MDR will apply to specified person-to-merchant (P2M) UPI transactions above Rs 2,000. The charge will be capped at Rs 300 for transactions of Rs 75,000 and above. Person-to-person UPI transfers and eligible merchant transactions of up to Rs 2,000 will continue without MDR.

Why mobile retailers are protesting

AIMRA has said its protest is not against UPI or digital payments themselves but against the additional cost that the MDR could impose on merchants.

AIMRA Vice President and Delhi-NCR President Tarvinder Singh said participating retailers would cover their UPI QR codes with black cloth and stop accepting UPI payments on October 2 as a symbolic protest on Gandhi Jayanti.

The association has argued that mobile phone retailers frequently handle transactions above Rs 2,000 and operate on relatively thin margins. It has therefore sought continuation of zero MDR for merchant UPI payments.

According to figures cited by AIMRA in its representation to Finance Minister Nirmala Sitharaman, a retailer processing between Rs 5 lakh and Rs 30 lakh in monthly UPI transactions could face an additional cost of around Rs 2,000 to Rs 12,000 a month.

The association has estimated that the proposed MDR could create a combined burden of around Rs 40 crore a month, or nearly Rs 500 crore annually, for small mobile retailers across the country. These are AIMRA’s estimates and reflect the association’s assessment of the potential impact on retailers.

What is changing for UPI payments?

The new MDR regime is scheduled to begin on October 15. It applies to specified P2M UPI transactions above Rs 2,000 rather than to all UPI payments.

This means a consumer making a qualifying purchase from a merchant for more than Rs 2,000 could generate an MDR charge for the merchant. UPI payments between individuals will remain outside the new MDR framework, while eligible merchant payments up to Rs 2,000 will also remain free of the charge.

The MDR is a fee associated with processing merchant payments. The government has maintained that the charge is not being imposed as a tax by the Centre and that consumers should not be separately charged for it. Finance Minister Nirmala Sitharaman has said the cost will be borne by participants in the payment ecosystem rather than directly recovered from customers.

Rs 300 cap for high-value transactions

The MDR structure also places a cap on the charge for very high-value transactions.

For specified merchant UPI payments of Rs 75,000 and above, the 0.4% MDR will be capped at Rs 300 per transaction. Other categories have been assigned separate MDR structures under the framework.

The structure therefore does not mean that every UPI transaction will attract a 0.4% fee. The applicable rate depends on the nature and value of the transaction.

NPCI has also said that more than 96% of UPI merchant transactions by volume are below the Rs 2,000 threshold and therefore will not attract the 0.4% MDR under the new framework.

Other trade groups also join protest

AIMRA is not the only trade body planning action against the new MDR regime.

Several business associations have announced plans to participate in the October 2 “No UPI Day”. These include 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, among others.

The coordinated protest is intended to put pressure on policymakers ahead of the October 15 implementation date.

For retailers, the issue is particularly relevant because mobile phone purchases often involve payments significantly above the Rs 2,000 threshold. Industry representatives have argued that even a relatively small percentage-based charge can add to costs when margins are limited.

Retailers want zero MDR to continue

AIMRA has reiterated that it supports digital payments and does not intend the October 2 protest to be viewed as opposition to UPI or the broader Digital India initiative.

Singh said the association’s concern was the financial burden on merchants accepting digital payments and reiterated its demand that merchant UPI transactions continue under a zero-MDR structure.

The protest is therefore positioned by the retailers’ body as a demand for a change in the cost structure rather than a rejection of digital payment systems.

What customers should know

For consumers, the immediate impact of the October 2 protest could be that participating mobile retailers temporarily do not accept UPI payments. Customers shopping at such outlets may need to use another payment method on that day.

The broader MDR change is scheduled for October 15. It will apply only to specified merchant UPI transactions above Rs 2,000, while person-to-person transfers and eligible merchant payments up to Rs 2,000 will remain outside the levy.

The October 2 action will serve as an early test of the intensity of merchant opposition to the new framework. With several trade bodies joining the protest, the debate over UPI’s future cost structure is likely to remain a key issue for merchants and payment-industry participants ahead of the October 15 rollout.