Supreme Court of India Reviews UPI Transaction Fee Framework

The Supreme Court of India issued notices to the Union of India, the National Payments Corporation of India, and the central bank after advocate Anjan Datta filed a public interest litigation challenging a new Merchant Discount Rate (MDR) framework. The policy, issued via a September 14 notification from the Ministry of Finance of India, introduces a 0.4 per cent fee on person-to-merchant UPI transactions exceeding Rs 2,000, effective October 15. The fee is capped at Rs 300 for transactions of Rs 75,000 and above, while merchants receiving up to Rs 1 lakh per month remain exempt.

During the hearing led by Chief Justice Surya Kant, the court declined to stay the implementation of the levy but questioned whether the executive has the legal authority to impose such a charge without a statutory instrument. The Solicitor General and Additional Solicitor General defended the measure, arguing the MDR is a service charge for banks and aggregators rather than a government revenue stream.

Anjan Datta argues the framework is arbitrary and lacks transparency, claiming the fees will either increase consumer prices or lead merchants to reject UPI payments. The petition further alleges discrimination against UPI, noting that RuPay-powered debit cards maintain no-charge protection without a monetary ceiling.