Summary of this article
Supreme Court refuses stay on specified UPI MDR charges above Rs 2,000.
New 0.4 per cent MDR framework is scheduled from October 15.
Centre, RBI and NPCI must respond within four weeks.
The Supreme Court has declined to put a temporary halt on the proposed merchant discount rate (MDR) for certain Unified Payments Interface (UPI) transactions above Rs 2,000. The court was hearing a petition challenging the introduction of the charge.
The matter will now proceed after the Centre and other respondents submit their responses. The court has given them four weeks to file their counter-affidavits. During the hearing, the Bench observed that the dispute involved technical aspects along with legal questions.
What The MDR Rule Covers
The new framework applies to specified person-to-merchant (P2M) UPI payments above Rs 2,000. It is scheduled to come into effect on October 15.
The standard MDR has been set at 0.40 per cent, subject to a maximum charge of Rs 300 for transactions of Rs 75,000 or more. The framework also sets different charges for certain categories of merchant payments.
MDR is a fee linked to processing a digital payment. The charge is generally settled within the payment ecosystem rather than being collected directly from the customer making the transaction.
The Centre has maintained that merchants should not transfer this charge to customers through an additional fee on UPI payments.
Different Rates For Certain Payments
The framework provides a flat Rs 5 MDR for specified transactions above Rs 2,000 in sectors such as fuel, insurance, telecommunications, railways and agricultural inputs.
A lower rate of 0.02 per cent applies to certain transactions involving mutual funds, securities and stockbrokers, with a maximum charge of Rs 300.
Some categories are outside the scope of the new charge. These include specified recurring payments, such as utility bills, monthly investments and OTT subscriptions. Merchants with monthly UPI collections of up to Rs 1 lakh are also exempt under the framework.
What Happens Next In The Case
The petition challenges the decision to introduce MDR on the specified UPI transactions. The Centre, Reserve Bank of India (RBI), National Payments Corporation of India (NPCI) and other respondents are part of the proceedings.
The Centre’s counsel informed the court that the proposed charges would apply from October 15. The government also submitted that the MDR would not accrue to it and would instead operate within the payment system.
The Supreme Court has not granted an interim stay on the framework. The respondents will now have four weeks to place their replies before the court, after which the matter can proceed further.
