2 hrs ago
Supreme Court Declines Stay on UPI Charges Above Rs 2,000
The Supreme Court is examining a new charge connected to some UPI payments.
It did not stop the charge before the case is fully considered.
The charge would apply when someone pays a merchant more than Rs 2,000 through UPI.
The planned rate is 0.4%, with a maximum charge of Rs 300 for large transactions.
Customers are not supposed to pay this charge directly.
Merchants would pay it instead.
Payments between individuals and smaller merchant payments would remain free.
The court wants the government to explain the legal basis and details of the plan.
The Supreme Court refused to temporarily block Merchant Discount Rate charges on specified UPI merchant transactions above Rs 2,000.
The Centre, Reserve Bank of India and other respondents must file counter affidavits within four weeks.
The court questioned whether the levy is a tax, fee or another type of charge and asked for its legal and executive basis.
A 0.4% MDR is scheduled to begin on October 15, with charges capped at Rs 300 for transactions of Rs 75,000 or more.
Person-to-person transfers and merchant payments up to Rs 2,000 will remain free, while merchants—not consumers—will bear the charge.
- Who
- The Supreme Court, the Union government, the Reserve Bank of India, the National Payments Corporation of India and advocate Anjan Datta's PIL.
- What
- The court refused to stay the planned Merchant Discount Rate on specified UPI person-to-merchant transactions above Rs 2,000 and sought responses from the Centre and other respondents.
- Where
- The proceedings took place in the Supreme Court of India and concern transactions made through the UPI network.
- When
- The Supreme Court issued its directions on Monday; the new charges are scheduled to take effect on October 15, 2026.
- Why
- The petition challenges the new fee framework, while the Centre and NPCI say charges are needed to cover electronic-payment costs and support the UPI ecosystem.
Challenge to the Charges
Government and Payments Industry Position
Legal basis
Challenge to the Charges
The petitioner argues that the charges need a valid legal basis and has asked the court to stop their implementation.
Government and Payments Industry Position
The Centre says the charge is neither a tax nor a fee, but a settlement charge between payment aggregators and banks rather than money taken by the government.
Impact on consumers
Challenge to the Charges
The petitioner contends that businesses could pass the additional cost to consumers and that the move could encourage more black-money transactions.
Government and Payments Industry Position
The Centre says consumers will not be charged directly, with person-to-person transfers and small merchant payments remaining free.
Purpose of the MDR
Challenge to the Charges
The challenge questions the basis and character of the charge, including what service justifies it.
Government and Payments Industry Position
The Centre and NPCI say electronic transactions involve costs and that revenue will support infrastructure resilience, cybersecurity, fraud prevention, innovation and customer service.
Key facts
- Planned MDR
- 0.4% on specified UPI person-to-merchant transactions above Rs 2,000
- Effective date
- October 15, 2026
- Maximum charge
- Rs 300 for transactions of Rs 75,000 or more
- Small payments
- Merchant UPI transactions up to Rs 2,000 remain free
- Person-to-person payments
- P2P UPI transfers remain free regardless of size
- Essential sectors
- Railways, telecom, insurance, fuel and agricultural inputs face a flat Rs 5 MDR above Rs 2,000
- Special financial transactions
- Mutual funds, securities, stockbrokers and dealers face a 0.02% MDR, capped at Rs 300
- Court deadline
- The Centre, RBI and other respondents must file counter affidavits within four weeks
Quotes
Petitioner’s counsel
Counsel representing the petitioner challenging the UPI fee framework
“We need these facts on affidavit. It's less legal and more of a technical issue.”
NDTV
telegraphindia.com
“It is neither a tax nor a fee.”
telegraphindia.com
Sources
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