Various traders’ bodies have called off their proposed ‘No UPI Day’ on October 2 after meeting Finance Minister Nirmala Sitharaman on Wednesday. The traders urged the Finance Ministry to make changes to the proposed Merchant Discount Rate (MDR) framework to ensure that it does not impose an additional financial burden on them. The ministry assured them that their concerns would be examined.
A delegation of around 20 senior trade leaders from different states, including representatives of the Confederation of All India Traders (CAIT), All India Mobile Retailers Association (AIMRA) and All India Consumer Products Distributors Federation (AICPDF), met Sitharaman to discuss concerns over the proposed MDR of 0.40% on UPI transactions above Rs 2,000.
The AICPDF urged the Finance Ministry to defer the proposed implementation of MDR on certain UPI transactions, saying its rollout just ahead of the festive season could affect low-margin businesses.
The traders’ bodies also proposed a phased introduction of MDR, beginning at 0.20% in 2026-27 and increasing by 0.05 percentage point annually until it reaches 0.40%. They sought an increase in the proposed Rs 1 lakh threshold to Rs 5 lakh and suggested that the threshold be reviewed in the context of the applicable GST turnover framework for small businesses.
The federation said even a 0.40% charge could have a significant impact on small traders, who typically operate on gross margins of around 3.5-5% and net margins of 0.7-1.25%. Such a charge could amount to around 25% of the net margin on a transaction, before accounting for other operating costs.
The AICPDF also sought a complete exemption for business-to-business and merchant-to-merchant transactions, arguing that MDR at multiple stages of the FMCG supply chain could result in repeated costs.
“The FMCG supply chain involves multiple commercial payment stages. These are genuine B2B commercial settlements and are fundamentally different from Person-to-Merchant (P2M) consumer payments. Applying MDR at multiple stages could result in a repeated financial burden on the same supply chain,” the AICPDF said in its memorandum to the ministry.
The federation also sought an examination of the GST implications of MDR to ensure that the framework does not create a cascading or tax-on-tax effect.
“They accepted the memorandum and assured us that they would look into the matter. We are hopeful of a positive outcome,” said Kailash Lakhyani, founder chairman, AIMRA.
