NEW DELHI, Sept 28: In a key legal development regarding digital payment regulations, the Supreme Court refused to suspend the implementation of the new Merchant Discount Rate (MDR) regime for high-value UPI transactions, while agreeing to examine its constitutional validity.
The decision came on a petition filed by advocate Anjan Datta, which questioned the executive framework announced by the Finance Ministry to introduce a 0.4 percent merchant fee on transaction values exceeding Rs 2,000 starting October 15. A three-judge bench headed by Chief Justice Surya Kant directed the Union Government, the Reserve Bank of India, and payment authorities to file formal responses within four weeks explaining the regulatory basis of the framework.
During the hearing, law officers representing the government affirmed that everyday person-to-person transfers and small-scale merchant transactions under Rs 2,000 will remain completely unaffected under zero-MDR protections. Government counsel maintained that the charge applies exclusively within the payment ecosystem among banks and service providers, with explicit directives prohibiting merchants from passing fees to end-users.
The petitioner, however, maintained that imposing financial charges through executive directions rather than statutory legislation creates arbitrary market cliffs and could impact small business margins. Refusing the petitioner’s plea to halt the October 15 rollout, the apex court declared that it would review the detailed submissions before deciding on the broader statutory questions.
