New Delhi: The Supreme Court on Monday refused to stay the Centre’s decision to introduce a merchant discount rate (MDR) on specified UPI payments to businesses
above Rs 2,000. It issued notices to the Centre, the Reserve Bank of India, the National Payments Corporation of India and the UPI Steering Committee on a petition challenging the measure.
“It is less a legal and more a technical issue,” a bench of Chief Justice Surya Kant and Justices Joymalya Bagchi and V Mohana observed. Additional Solicitor General N Venkataraman, appearing for the Centre, told the court that 96 per cent of people using the payment system were exempt.
What the petition says
Advocate Anjan Datta filed the public interest litigation against the Centre’s September 14 notification and the MDR framework announced the following day. He argued that the charge lacked adequate statutory safeguards, transparency and public consultation.
“Declare that no MDR or analogous compulsory charge may be imposed or recovered merely on the strength of a press release or FAQs absent a duly authorised, authenticated and published statutory instrument,” the petition said.
Datta also questioned why RuPay debit card payments retain protection from charges without a monetary limit while the UPI exemption ends at Rs 2,000 for the affected merchant transactions.
How charges will work
Under the announced framework, a 0.4 per cent MDR will apply from October 15 to specified person-to-merchant UPI payments above Rs 2,000. MDR is a fee charged within the payment system for processing a merchant transaction. The government has said customers will not be charged for making these payments. Person-to-person UPI transfers will remain free regardless of the amount.
The standard MDR will be capped at Rs 300 for payments of Rs 75,000 or more. Merchant payments above Rs 2,000 in sectors including railways, telecom, insurance, fuel and agricultural inputs will attract a flat Rs 5 fee. Payments into mutual funds and securities, including those made through stockbrokers and dealers, will attract 0.02 per cent MDR, capped at Rs 300.
The court’s refusal to grant an interim stay leaves the announced start date in place while it considers the challenge. It does not settle the petition’s claims.
