UPI charges of 0.4% to be levied on merchant transactions above ₹2,000

A public interest litigation (PIL) has been filed in the Supreme Court, questioning the government's decision to impose a merchant discount rate (MDR) on UPI payments over Rs 2,000. The Centre's notification, effective from October 15, introduces a 0.4% MDR on person-to-merchant UPI transactions above the Rs 2,000 threshold, with a cap of Rs 300 for transactions over Rs 75,000.

The plea argues that the government's framework lacks statutory safeguards, transparency, and public consultation, as it was announced through a press release rather than publication in the Official Gazette. The petition questions the constitutionality of Section 10A of the Payment and Settlement Systems Act, 2007, which grants the executive discretion over electronic payment mode protection.

The petitioner also raises concerns about the arbitrary nature of the MDR rates, transaction thresholds, caps, and sectoral classifications, which could disproportionately impact low-margin merchants and potentially lead to indirect consumer burdens and digital exclusion. The legal team seeks to challenge the imposition of the MDR on UPI transactions above Rs 2,000, or to compel reconsideration of the framework with transparent consultation, empirical data, an impact assessment, and safeguards for small enterprises.