If you’re going to the market to shop on the October 2nd holiday, keep cash in your pocket when you leave home. Shoppers across the country are going to celebrate ‘No UPI Day’ tomorrow. Merchants from Mumbai to Delhi will not accept any form of digital payment from customers on this day. QR code scanners installed at shops will be covered with black cloth. Shop sound boxes will be silent. The entire protest is being done against the MDR rule which will come into effect from October 15.

Profits are looming during the festive season

The root of this entire controversy is MDR i.e. Merchant Discount Rate. The government is going to impose a 0.40 percent MDR charge on UPI payments above Rs 2,000 from October 15. Several business associations, including the Federation of Retail Traders Welfare Association (FRTWA), have strongly opposed it. Traders clearly say that this will destroy their profits. The Kandivli West, Mumbai-based business association believes that the tax, which is 0.40 percent today, may go up to 1 percent tomorrow. Shoppers will go broke if they pay extra tax this festive season. Manish Tiwari, manager of the Kandoi Haribhai Damodar Mithaiwala shop in Mumbai’s Borivali West, has clarified that no digital payments will be accepted at his shop on October 2. Payment will be made by cash or card only.

Because traders mind

Businessmen say their profits are already limited. In such a situation, if they have to pay a 0.4% charge on every transaction above Rs 2,000, they will have a huge financial burden. For example, if a customer buys goods worth more than Rs 10,000, on payment through UPI, Rs 40 will be automatically deducted from the shopper’s account. The Retailers Association of India (RAI) says the charge is being imposed at a time when Dussehra-Diwali is ahead. During this period, major purchases are made, from electronics to clothes. Usually the transaction value is more than Rs 2,000. In such a situation this rule will have a huge impact on their profits. Many people including Delhi businessman Brijesh Goyal, Vinay Nagarang have demanded the Finance Minister to withdraw this decision. The Indian Chamber of Commerce and Industry has also demanded its withdrawal after discussions with business representatives of 17 states.

Delhi’s Chamber of Trade and Industry (CTI) has also announced to celebrate No UPI Day on October 2. CTI says more than 100 major business organizations will be involved. This protest will be seen in more than 2000 places across the country. However, the Confederation of All India Traders (CAIT) has distanced itself from it. CAT has clarified that it is not part of this protest.

The government gave a big relief

Amid the protests over UPI MDR, the Finance Ministry has presented its stand. He says that this rule will affect only big industrialists. Shopkeepers whose monthly earnings from UPI are less than Rs 1 lakh are completely exempted from this MDR charge. Apart from this, under the new rules, the maximum charge limit on large transactions has been fixed at Rs 300. This means that the maximum charge will be Rs 300 on transactions of Rs 75,000 or more. Even if a customer makes a payment of Rs 5 lakh, only Rs 300 will be deducted from the account.

Understand what MDR is

Merchant Discount Rate (MDR) can be called the toll tax of the digital payment world. When you go to a store and pay with a card or mobile instead of cash, a large network takes the money from your bank account and transfers it to the shopkeeper’s account. These include banks, UPI apps, MasterCard or Visa companies. The cost incurred to keep this entire machinery running for 24 hours is called MDR. Finance Minister Nirmala Sitharaman has made it clear that not a penny of the MDR levied on UPI will go to the government exchequer. This is not a government tax or cess.