Plea Against UPI MDR on Transactions Above ₹2,000 Before SC on Monday

The Supreme Court will hear on Monday a plea challenging the Centre’s decision to impose a Merchant Discount Rate (MDR) on specified UPI person-to-merchant transactions above ₹2,000.

According to the apex court’s cause list for September 28, the petition will come up before a bench headed by Chief Justice of India Surya Kant and comprising Justices Joymalya Bagchi and V Mohana.

The public interest litigation, filed by advocate Anjan Datta, challenges the Centre’s September 14 notification and the MDR framework announced on September 15. The new framework is scheduled to come into effect from October 15.

Under the framework, a 0.4 per cent MDR will be levied on specified merchant UPI transactions above ₹2,000, with the charge capped at ₹300 for payments of ₹75,000 and above.

Essential and thin-margin sectors, including railways, telecom, insurance, fuel and agricultural inputs, will attract a flat ₹5 MDR per transaction above ₹2,000. Payments involving mutual funds, securities, stockbrokers and dealers will carry an MDR of 0.02 per cent, also capped at ₹300.

The framework, however, keeps person-to-person (P2P) UPI transactions free, irrespective of transaction value. P2P payments account for about 37 per cent of UPI transaction volume and 70 per cent of its value, according to the petition.

The petitioner has alleged that the levy was introduced without adequate statutory safeguards, transparency or public consultation. It has also challenged the constitutional validity of amended Section 10A of the Payment and Settlement Systems Act, 2007.

The plea questions the distinction between UPI and RuPay debit-card payments, alleging that the framework is arbitrary and discriminatory and could increase the burden on merchants, particularly low-margin businesses.

It seeks quashing or suspension of the MDR framework, or alternatively its reconsideration following transparent consultation, publication of empirical data and an impact assessment, along with safeguards for micro and small enterprises.