Guwahati: The Supreme Court has declined to put the Centre’s new framework for Merchant Discount Rate (MDR) on UPI transactions on hold for now, while seeking a detailed response from the government.
A Public Interest Litigation (PIL) filed by advocate Anjan Datta challenges the proposed 0.4% MDR on specified merchant transactions above Rs 2,000. The charges are scheduled to take effect from October 15.
Datta has asked the court to quash notifications issued by the Centre on September 14 and 15 that provide for charges on commercial UPI transactions exceeding Rs 2,000.
A bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and Vipul M Pancholi issued notice to the Centre and asked it to place the relevant facts before the court through an affidavit.
The petitioner’s counsel argued that UPI has helped reduce the use of black money and said the proposed charges could discourage people from using digital payment services.
Appearing for the Centre, Additional Solicitor General N Venkataraman said the new system would take effect from October 15. He told the court that 96% of gateway users would not be covered by the charges.
Venkataraman also said essential services would be subject to a maximum charge of Rs 5 and that an overall limit based on transaction value would apply. He described the arrangement as an industry-level settlement mechanism rather than a tax or fee.
After hearing the submissions, CJI Kant said the technical aspects of the framework should be explained in the government’s affidavit.
Justice Bagchi also questioned the executive’s legal authority to introduce the measure, given its potential impact on a population of 140 crore.