No stay on new UPI charges; SC seeks responses from Centre, RBI, NPCI

NEW DELHI: The Supreme Court has refused to stay the Centre’s decision to introduce a Merchant Discount Rate (MDR) on specified person-to-merchant (P2M) UPI transactions above Rs 2,000. The court declined to grant interim relief against the new framework and directed the Centre, the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) to file their counter-affidavits within four weeks. A three-judge bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V. Mohana heard the plea.

Additional Solicitor General N. Venkataraman, appearing for the Centre, told the court that the MDR was neither a tax nor a fee collected by the government. He said the amount would remain within the payment ecosystem and be shared among entities involved in processing UPI transactions. The new framework is scheduled to take effect from October 15. It will apply only to specified P2M transactions above Rs 2,000. Person-to-person UPI transactions will remain free, irrespective of the amount, while merchant transactions up to Rs 2,000 will remain outside the MDR framework.

The Finance Ministry has also clarified that UPI apps cannot impose platform fees or other charges on users under the new framework. The Supreme Court sought clarity on the legal basis for imposing the MDR, particularly if it is neither a tax nor a government fee. The court will consider further proceedings after receiving the responses from the Centre, RBI and NPCI.