SC Declines to Stay Fee on UPI Transactions Above Rs 2,000, Issues Notice to Centre, RBI, NPCI

New Delhi: The Supreme Court on Monday declined to stay the Centre's decision to levy a Merchant Discount Rate (MDR) on certain UPI person-to-merchant transactions above Rs 2,000, but asked the government to explain the legal basis for the charge on affidavit.

A bench of Chief Justice Surya Kant and Justices Joymalya Bagchi and V Mohana issued notices to the Centre, the Reserve Bank of India and the National Payments Corporation of India, directing them to file counter affidavits within four weeks. The court described the matter as more technical than legal. The plea, filed by advocate Anjan Datta, challenges the Finance Ministry's September 14 notification and the MDR framework announced the next day, arguing they were introduced without adequate statutory safeguards, transparency or public consultation.

Under the framework, which takes effect on October 15, a 0.4 per cent fee applies to merchant payments above Rs 2,000, capped at Rs 300 for transactions of Rs 75,000 and above. Essential sectors such as railways, telecom, insurance, fuel and agricultural inputs will pay a flat Rs 5 per transaction, while payments into securities and mutual funds attract 0.02 per cent. Person-to-person transfers, small payments and merchants receiving up to Rs 1 lakh a month remain exempt. This ends nearly six years of free UPI payments.