Merchants protest new UPI transaction charges in India

Merchants in India are protesting the implementation of a new Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions. Under the new rules effective October 15, Person-to-Merchant (P2M) UPI transactions exceeding ₹2,000 will incur a 0.4% MDR. While person-to-person transfers remain exempt and certain small categories are excluded, the charge is causing significant concern among low-margin businesses.

FMCG wholesalers have expressed particular distress, noting that their net margins are often as low as 1.5%. For a ₹30,000 transaction, a 0.4% MDR amounts to ₹120, which would significantly reduce their remaining profit. Similarly, electronics traders in Ahmedabad have staged protests, wearing black bands and holding posters to demand the reversal of the decision. These traders argue that the additional cost places them at a disadvantage against online competitors and may force them to pass the costs on to consumers.

While the central government has clarified that MDR is not a charge to be collected from customers and has instructed banks to ensure merchants do not pass the burden to consumers, traders fear the policy could disrupt the seamless digital payment ecosystem that UPI has established.