The Supreme Court on Monday refused to grant an interim stay on the Centre’s decision to impose a Merchant Discount Rate (MDR) on specified UPI person-to-merchant transactions above ₹2,000 from October 15.
The bench, however, sought responses from the Centre and other parties on a petition challenging the new framework and directed them to file their counter affidavits within four weeks. The court observed that the issue was “less legal and more technical”.
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Under the new framework, an MDR of 0.4 per cent will apply to specified UPI transactions above ₹2,000. The Centre told the court that around 96 per cent of users would remain exempt.
The government has maintained that UPI will continue to be free for all person-to-person transactions, irrespective of the amount transferred. It has also said that approximately 96 per cent of person-to-merchant transactions will remain unaffected.
MDR is charged within the merchant payment ecosystem and is not a fee directly imposed on customers. Banks have been advised to ensure merchants do not pass the charge on to customers, while UPI application providers have been prohibited from imposing platform fees or hidden charges.
The Centre has also rejected allegations that foreign pressure influenced the decision, saying UPI policy is determined independently.
