Indian mobile retailers will observe "No UPI Day" on October 2, refusing payments. They protest a new government-mandated 0.4% MDR on UPI payments over Rs 2,000, starting October 15. Over five other trade bodies have joined, arguing UPI acceptance should be incentivised, not taxed.
How We Got Here
A 2020 law barred MDR on UPI, but the government has since dictated which payments remain free. The Department of Financial Services and NPCI published these new rates on September 15.
The Numbers
- Payments above Rs 2,000 incur a 0.4% MDR, capped at Rs 300.
- Specific sectors like railways, telecom, and fuel pay a flat Rs 5 per payment over Rs 2,000.
- Mutual funds and stockbrokers face 0.02% MDR, also capped at Rs 300.
- Payments under Rs 2,000, P2P transfers, and small merchants receiving up to Rs 1 lakh monthly remain exempt.
- AIMRA estimates the new MDR will cost small mobile retailers Rs 40 crore monthly.
What Happens Next
🇮🇳 Why This Matters for India
For the lakhs of Kirana store owners and small electronics dealers in Tier-2 cities like Nashik and Vijayawada, these MDR costs will either squeeze margins or be passed directly to price-sensitive customers.
The Take
The government has effectively turned UPI MDR into a tax, not a cost recovery mechanism for payment providers. Expect this to slow merchant adoption for discretionary purchases over Rs 2,000, especially in competitive retail like electronics.
Source:
MediaNama ↗