AICPDF backs Oct 2 ‘No UPI Day,’ flags Rs 9,000-cr hit

BENGALURU: The All India Consumer Products Distributors Federation (AICPDF) has thrown its weight behind the “No UPI Day” protest planned for Oct 2, claiming the new merchant charge on certain UPI payments could impose an annual cost of Rs 7,000-9,000 crore on the FMCG retail and distribution ecosystem.The federation, which says its network comprises about 4.5 lakh distributors and 1.3 crore retailers, said members across states would participate in the one-day observance through local trade and distributor associations.The protest comes ahead of the new UPI merchant discount rate (MDR) framework taking effect from October 15. A 0.4% MDR will apply to specified person-to-merchant transactions above Rs 2,000, with the charge capped at Rs 300 for transactions of Rs 75,000 and above. Person-to-person payments remain free, while the government has said about 96% of merchant transactions will remain unaffected.AICPDF said its Rs 7,000-9,000 crore estimate factors in payments at multiple points in the FMCG chain, particularly consumers paying retailers and retailers subsequently paying distributors.“In FMCG, there can potentially be two points of impact. The consumer makes a payment to the retailer, and subsequently the retailer makes payment to the distributor,” AICPDF national president Dhairyashil H Patil said. If both transactions are eligible for MDR, he said, the same sales cycle could incur payment costs at two levels.Patil said the Rs 7,000-9,000 crore figure was an industry estimate and called on the government, RBI and NPCI to undertake a transaction-level assessment of the impact.The federation estimates that 40-45% of payments received by distributors from retailers could potentially fall into the higher-value transaction category, though the actual exposure would depend on transaction sizes and payment modes.AICPDF said FMCG businesses may have limited scope to pass on such costs because packaged products operate within an MRP-based pricing structure and trade margins are relatively thin.“We are not against UPI or digital payments,” Patil said, adding that the protest was intended to seek further dialogue on how the costs are distributed.Several trader associations have announced participation in the October 2 action, though the Confederation of All India Traders has separately said it has neither called for nor endorsed a nationwide “No UPI Day.”You use AI every day. Now get your AI Quotient. Take the AIQ test.