The Supreme Court on Monday sought responses from the Centre, the Reserve Bank of India (RBI) and other concerned authorities on a petition challenging the imposition of Merchant Discount Rate (MDR) on specified UPI person-to-merchant transactions above ₹2,000.
A bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V. Mohana directed the respondents to file their counter affidavits within four weeks. However, the court declined to grant an interim stay on the decision. The petition was filed as a public interest litigation by advocate Anjan Datta.
Appearing for the Centre, Additional Solicitor General N. Venkataraman told the court that 96 per cent of users of the payment gateway would remain exempt from the charge. The bench observed that the matter was “less a legal and more a technical issue.” The petitioner’s counsel requested an interim stay until the responses were filed, but the court rejected the request.
The government’s new MDR framework, effective from October 15, introduces a 0.4 per cent charge on specified UPI merchant payments above ₹2,000, ending nearly six years of fully free UPI payments for the affected transactions. Person-to-person (P2P) transfers will continue to remain free, regardless of the transaction amount.
Under the new framework, the MDR will be capped at ₹300 for payments of ₹75,000 and above. Essential and thin-margin sectors such as railways, telecom, insurance, fuel and agricultural inputs will pay a flat ₹5 MDR per transaction for payments above ₹2,000. Transactions involving mutual funds, securities, stockbrokers and dealers will attract an MDR of 0.02 per cent, also capped at ₹300.
P2P transactions account for around 37 per cent of UPI transaction volume and 70 per cent of its transaction value, and will continue to carry zero charges. The Supreme Court will consider the matter after receiving the responses from the Centre, RBI and other respondents.
