0.4% UPI Rule: The Chamber of Trade and Industry (CTI) is opposing the Centre’s new Merchant Discount Rate (MDR) on certain UPI payments above Rs 2,000. The new system will start from October 15, 2026.
MDR of 0.4% will apply to eligible person-to-merchant UPI payments above Rs 2,000. However, UPI payments between two people will stay free. Payments to merchants up to Rs 2,000 will also remain free. The government has said around 96% of merchant UPI transactions won’t be affected by the new rule.
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CTI Calls For ‘No UPI Day’ on October 2
CTI has asked traders across India to observe a nationwide “No UPI Day” on October 2. The day is also Gandhi Jayanti.
Traders taking part in the protest plan to cover their UPI QR codes, scanners and sound boxes with black cloth. They’ve also been asked to accept cash instead of UPI payments during the protest. Other trade groups have also backed the October 2 campaign.
CTI President Brijesh Goyal and other trader representatives have raised concerns about the extra cost for small and medium businesses. They say many traders already work with low profit margins. They fear the new fee could make businesses reduce their use of digital payments.
For example, a 0.4% MDR would mean a fee of Rs 12 on a Rs 3,000 payment and Rs 200 on a Rs 50,000 payment. The fee will be capped at Rs 300 for transactions of Rs 75,000 or more.
Why Traders are Worried About High-Value UPI Payments
Data from FY 2025-26 shows that UPI payments above Rs 2,000 made up only around 4% of person-to-merchant transactions by volume. However, they made up about two-thirds of the total value. Total UPI transactions in FY 2025-26 crossed 24,000 crore and were worth around Rs 314 lakh crore. CTI has asked Union Finance Minister Nirmala Sitharaman to withdraw the MDR decision and keep UPI payments free for businesses.
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At the same time, the government has said MDR isn’t a tax collected by the government or NPCI. It’s a payment made within the digital payment system to support banks and payment companies. The government has also said small merchants earning up to Rs 1 lakh a month through UPI QR payments will remain exempt.
Petrol Dealers Also Seek Exemption From UPI MDR
Petrol pump dealers in Mumbai, Thane, Raigad and Palghar have also opposed the new charges. They’ve approached the RBI and asked for a complete exemption for fuel retailers.
The dealers have warned that they may stop accepting UPI payments above Rs 2,000 from October 15 if their demand isn’t accepted. They say extra payment costs could put more pressure on their already tight margins.
For fuel payments, the new framework actually sets a special flat MDR of Rs 5 for transactions above Rs 2,000. This is different from the standard 0.4% MDR for other eligible merchant payments.
