Indore traders oppose reported 0.4% MDR on UPI merchant payments above ₹2,000
More than 100 trade associations in Indore reportedly observed a No UPI Day over a proposed 0.4% merchant discount rate on P2M UPI payments above ₹2,000, due from 15 October 2026. Retailers say the charge could pressure low-margin businesses and push larger transactions toward cash.
What happened
Indore merchants observed a No UPI Day against NPCI’s proposed 0.4% MDR on UPI merchant payments above Rs 2,000. Trade groups across Madhya Pradesh warn the fee
Key facts
- 0.4% MDR on P2M UPI payments above Rs 2,000
- MDR effective 15 October 2026
- MDR capped at Rs 300 for transactions of Rs 75,000 or more
- More than 100 trade associations participated
- Ahilya Chamber represents more than 125 local trade groups
- About 200,000 merchants participated
- UPI income up to Rs 100,000 per month exempt for small merchants
Why this matters
Payments and merchant-services buyers should monitor the proposed MDR closely, as retailer demand for lower-cost acceptance, surcharging alternatives, and cash-management solutions could increase if it proceeds.
What to watch
- Official NPCI, RBI, Ministry of Finance, bank, or payment-network notification confirming whether the reported 0.4% MDR and 15 October 2026 start date are valid.
- Final scope: transaction threshold, merchant turnover threshold, merchant categories, payer-versus-payee liability, taxes, and surcharge permissibility.
- Participation by national retail and trade associations beyond Indore, including coordinated UPI boycott days or litigation.
- Changes in high-value P2M UPI transaction volumes, average ticket size, cash withdrawals, and card usage following any announcement.
- Acquirer communications on revised merchant agreements, QR pricing, settlement fees, or promotional MDR waivers.
- Consumer-protection or payments-regulatory action against explicit UPI surcharges, cash-only policies, or transaction splitting.
- Map exposure by average ticket size, gross margin, and current UPI mix; prioritize categories where bills above ₹2,000 are frequent.
- Prepare compliant payment-steering alternatives, including cash discounts, card-routing options, bank-transfer workflows, and checkout messaging, subject to final rules.
- Model margin impact under full absorption, partial price pass-through, and a 10-30% migration of eligible UPI transactions to cash or alternative rails.
- Engage acquirers and payment aggregators early on enterprise pricing, MDR caps, bundled POS arrangements, and merchant-category exemptions.
- Track trade-body actions and maintain contingency staffing, cash-handling, reconciliation, and fraud controls if cash usage increases.