SC issues notice to Centre, RBI on MDR on UPI payments; refuses to stay rollout

The Supreme Court on Monday issued notices to the government the Reserve Bank of India RBI on a plea challenging the levy of Merchant Discount Rate MDR on Unified Payments Interface UPI transactions above Rs 2000 reported news agency PTIThe Court however refused to grant an interim stay on the Centres decision to impose MDR from October 15A bench of Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V Mohana agreed to hear the plea and directed the Centre the RBI and others to file their counter affidavits within four weeks according to PTIAdditional Solicitor General N Venkataraman appearing for the government told the bench that nearly 96 per cent of people using the gateway were exempt as the charges are applicable to only person to merchant transactions above Rs 2000It is less a legal and more a technical issue the bench observedA public interest litigation PIL was filed by advocate Anjan Datta After the apex court issued notice and directed the respondents to file their counter affidavits the counsel appearing for the petitioner requested the bench Please stay it till thenThe bench however refused this requestProtest against MDRThe latest development comes amid retailers stock brokers traders and petrol dealers raising concerns against the MDR charges on UPI Mobile phone retailers have said they will observe a no UPI day on October 2 to protest against the MDR charges The Retailers Association of India had raised concerns on the MDR charges saying the move might prompt small retailers to switch to cash to avoid the cost burdenMDR on UPIThe government had introduced 04 per cent charge on UPI payments above Rs 2000 to merchants and capped the fee at Rs 300 for payments of Rs 75000 and above from October 15 thus ending nearly six years of fully free UPI paymentsRailways fuel telecom bill payments and insurance have a flat fee of Rs 5 per transaction above Rs 2000 Payments into mutual funds securities and through stockbrokers and dealers will attract 002 per cent MDR capped at Rs 300Why did the government introduce the chargeThe Finance Ministry had said that since its launch the UPI has grown into the worlds largest realtime interoperable payment system processing 245 billion transactions in August 2026 alone The new framework ensures resources from highervalue merchant transactions are reinvested to support small businesses and strengthen digital payments across the country it saidTo keep this system selfsustainable secure and innovative a small fee on highvalue merchant transactions helps fund better infrastructure and cybersecurity support for small merchants in Tier IIIndashVI towns and rural areas and awareness and incentives to expand UPI adoption it explainedThe government has clarified that the charges is not applicable for the customers using the digital payments systemPersontoPerson transfers are always free regardless of amount Vendors earning up to Rs 1 lakh per month via UPI QR codes continue to enjoy zero charges Over 95 per cent of merchant payments are below Rs 2000 these remain free said the Finance Ministry had saidWith inputs from PTI