SC refuses to stay MDR on UPI payments above ₹2,000
What's the story
The Supreme Court has refused to grant an interim stay on the Indian government's new merchant discount rate (MDR) policy. The policy imposes a 0.4% charge on certain Unified Payments Interface (UPI) transactions above ₹2,000. The decision was taken while hearing a public interest litigation challenging the legality of this levy. Notices have been issued to the government and financial organizations involved in implementing this policy.
Policy details
New MDR policy to come into effect on October 15
The new MDR policy is set to come into effect on October 15.
Under this framework, general person-to-merchant UPI transactions above ₹2,000 will attract an MDR of 0.4%. However, it will be capped at ₹300 for transactions of ₹75,000 and above.
Payments up to ₹2,000 and person-to-person transactions will continue to remain free under the new policy.
Defense
Government defends new MDR policy
The government has defended the new MDR policy, saying it aims to ensure the sustainability of the digital payments ecosystem. It also keeps most routine UPI transactions free.
Small merchants with monthly UPI QR code receipts of up to ₹1 lakh will be exempt from this levy.
Additional Solicitor General Venkataraman told the Supreme Court that 96% of transactions routed through gateways would remain exempt under this framework.
Charge inquiry
What CJI Surya Kant said
Chief Justice of India Surya Kant observed that the issue appeared to be "more of a technical issue."
Meanwhile, Justice Joymalya Bagchi asked if the executive had the power to impose what he called an expropriation.
He further questioned, "It's not a fee, then what is the character? Charge of 1% on 140 crore Indians."
Legal challenge
Petition challenges legality of MDR levy
The petitioner, advocate Anjan Datta, has challenged the legality of the MDR levy. He alleged that it was introduced without adequate statutory safeguards and public consultation.
The plea also questions the constitutional validity of amended Section 10A of the Payment and Settlement Systems Act, 2007.
It seeks to quash or suspend the framework imposing MDR on UPI transactions above ₹2,000 unless transparent consultation is conducted with empirical data and impact assessment published.
Payment comparison
Petitioner raises concerns over consumer burden, digital exclusion
The petitioner has also questioned the difference between UPI transactions and RuPay debit card payments.
He pointed out that RuPay debit cards continue to enjoy no-charge protection without a monetary ceiling.
The plea alleges that the framework is arbitrary and discriminatory, potentially harming merchants with low margins while raising concerns about indirect consumer burden and digital exclusion.