The traders said the move could increase the burden on small and medium businesses and affect digital payment adoption among merchants.

The delegation was led by Praveen Khandelwal, Member of Parliament from Chandni Chowk and secretary general of the Confederation of All India Traders (CAIT). 

Representatives sought clarity on the proposed charge and urged the government to take into account the concerns of the trading community.

Earlier, the All India Consumer Products Federation and the All India Mobile Retailers Association had announced plans to observe October 2 as “No UPI Day” in protest against the proposed fee. 

However, the organisations decided to withdraw the protest call after discussions with the finance minister.

Speaking to reporters after the meeting, Khandelwal said the decision was taken following constructive talks and assurances that the concerns raised by traders would receive due consideration. 

He said the trading community was encouraged by the dialogue and would continue to engage with the government on the issue.

Despite the withdrawal of the protest, the proposed 0.4 per cent fee on eligible merchant UPI transactions above Rs 2,000 is scheduled to come into effect from October 15. 

Traders’ bodies said they remain hopeful that their concerns will be addressed before the new charge is implemented.

However, earlier this month, National Payments Corporation of India (NPCI) refuted reports in some sections of the media that have alleged that GST on UPI Merchant Discount Rate (MDR) will burden small merchants and make digital payments costly. 

“This is incorrect. MDR applies only to P2M transactions above Rs 2,000. Transactions up to Rs 2,000 continue to have zero MDR and therefore zero GST impact,” NPCI said in a statement. 

Government data indicates that transactions of up to Rs 2,000 constitute more than 96 per cent of UPI merchant transaction volume. 

As a result, the overwhelming majority of UPI payments will not attract MDR and hence no GST on MDR.