Supreme Court refuses to stay UPI MDR above ₹2,000, issues notice to Centre, RBI

The Supreme Court on Monday refused to stay the Centre’s decision to impose merchant discount rate (MDR) on specified UPI person-to-merchant transactions above ₹2,000, but sought an affidavit from the government explaining the basis and legal character of the charge.

A bench headed by Chief Justice Surya Kant and comprising Justices Joymalya Bagchi and V Mohana was hearing a plea challenging the Centre’s decision to introduce MDR on specified UPI transactions.

The bench directed the Centre, the Reserve Bank of India and the National Payments Corporation of India (NPCI) to respond to the plea and sought a counter-affidavit within four weeks.

During the hearing, the petitioner’s counsel argued that the introduction of UPI had helped reduce black money transactions and urged the court to stay the decision, saying it could lead to corruption.

After the top court issued notice and directed the respondents to file their counter affidavits within four weeks, the counsel appearing for the petitioner requested the bench, “Please stay it till then.”

The court, however, declined to grant interim relief. The public interest litigation (PIL) was filed by advocate Anjan Datta.

Additional Solicitor General Nl Venkatraman, appearing for the Centre, said the revised framework would come into effect from October 15 and that 96% of users of payment gateways would be exempt.

“Essential services are capped at ₹5. There’s a value cap. It’s not a tax or fee,” the ASG said.

The Chief Justice said the government needed to place these facts on affidavit, observing that the matter was “more of a technical issue”.

The ASG said there was a cost involved in debit and credit card transactions and that UPI was no different.

“Two operators provide the service. One are the banks. It is not statutory collection by Government of India. It’s a settlement fee amongst the players, which NPCI facilitates. Government is not taking a rupee of this,” he submitted.

The ASG said the amount would go to aggregators and banks, which provide the service and facilitate transactions in place of cash.

“It is purely administrative,” he said.