The Supreme Court on Monday refused to stay the Centre’s decision to impose MDR (Merchant Discount Rate) on UPI payments exceeding Rs 2,000. However, the top court has issued notice to the Centre, the Reserve Bank of India (RBI), the National Payments Corporation of India (NPCI), and the UPI Steering Committee on a plea challenging the Gazette notifications that announced charges on commercial UPI person-to-merchant transactions above Rs 2,000. “It is less a legal and more a technical issue,” a bench of Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V Mohana observed.
Additional Solicitor General N Venkataraman, appearing for the Centre, told the bench that 96 per cent of people using the gateway were exempt.
The public interest litigation (PIL) filed by advocate Anjan Datta has challenged the Centre’s September 14 notification and the MDR framework announced on September 15. The plea alleged that the levy was introduced without adequate statutory safeguards, transparency, or 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,” it said.
The petitioner has also questioned the distinction between UPI transactions and RuPay debit card payments, pointing out that the notification continues the no-charge protection for RuPay debit cards without a monetary ceiling.
0.4 per cent fee
Ending nearly six years of fully free UPI payments, the government has introduced a 0.4 per cent fee on transfers worth over Rs 2,000 made to merchants through the UPI platform from October 15, while explicitly ring-fencing everyday person-to-person transactions and small payments from any charge.
MDR capped at Rs 300
The MDR will be capped at Rs 300 for payments of Rs 75,000 and above.
Essential and thin-margin sectors – railways, telecom, insurance, fuel and agricultural inputs – will pay a flat MDR of Rs 5 per transaction above Rs 2,000.
Payments into mutual funds, securities and through stockbrokers and dealers will attract 0.02 per cent MDR, also capped at Rs 300.
Person-to-person (P2P) transfers – which make up 37 per cent of UPI’s transaction volume and 70 per cent of its transaction value – will continue to attract zero charges, irrespective of size.
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