Sunny Khurma
Cheif Editor
Amritsar, October 1, 2026: Traders from 22 states have joined a nationwide campaign opposing the new Merchant Discount Rate on selected UPI payments, with representatives deciding to submit memoranda to Members of Parliament and seek withdrawal of the fee.
The strategy was finalised during a virtual meeting attended by trader representatives from across the country. Participants agreed to observe October 2 as UPI Fee Protest Day, during which traders will raise their concerns over the 0.4% MDR applicable to certain merchant transactions.
As part of the campaign, memoranda will be handed over to MPs in different states, urging them to take up the issue and seek reconsideration of the new payment framework.
Traders also plan to display banners and stickers in markets carrying messages opposing the additional merchant cost. Feedback received from businesses during the campaign will later be compiled and presented to the authorities.
In Punjab, traders intend to take the campaign to individual markets and involve local business groups in raising awareness about the impact they believe the new fee could have on retailers.
The protesting traders have clarified that they are not opposing digital payments or UPI itself. Their objection is specifically to the additional cost that qualifying merchants will have to bear when accepting certain higher-value UPI transactions.
They argue that small and medium-sized businesses are already dealing with expenses such as shop rent, electricity bills, employee salaries, transportation, financing costs, inventory and tax compliance. An additional payment-processing expense, they say, could further reduce operating margins.
Under the new UPI framework scheduled to take effect from October 15, 2026, a 0.4% Merchant Discount Rate will apply to specified person-to-merchant transactions above ₹2,000. For eligible transactions of ₹75,000 or more, the MDR is capped at ₹300 per transaction.
However, the new rules do not impose a transaction charge on ordinary UPI users.
All person-to-person UPI transfers will continue to remain free irrespective of the amount transferred. Merchant payments of up to ₹2,000 will also remain free, while qualifying small merchants receiving up to ₹1 lakh per month through UPI QR payments remain covered by the zero-MDR framework.
According to the framework, approximately 96% of merchant UPI transactions are expected to remain unaffected, with the MDR applying to only around 4% of merchant transactions.
Certain essential sectors also receive different treatment. Eligible UPI transactions above ₹2,000 involving areas such as fuel, railways, telecommunications, insurance and agricultural inputs attract a flat ₹5 MDR instead of the standard percentage charge.
The government has said the new system is intended to provide a sustainable revenue model for banks, payment service providers and UPI platforms while supporting continued investment in digital-payment infrastructure.
Traders opposing the measure, however, argue that the cost of maintaining the UPI ecosystem should not fall disproportionately on businesses accepting digital payments.
Their campaign is therefore focused on seeking reconsideration of the merchant fee while continuing to support the wider adoption of digital payments.
With traders from 22 states participating, the October 2 campaign is expected to bring the concerns of retailers and small businesses directly to elected representatives ahead of the new MDR framework taking effect later this month.
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