Delhi/Hyderabad, Sept. 28 (Maxim News): The Supreme Court on Monday issued notices to the Centre, Reserve Bank of India (RBI) and National Payments Corporation of India (NPCI) on a petition challenging the new Merchant Discount Rate (MDR) framework for specified UPI merchant transactions above Rs 2,000.
The petition was filed by advocate Anjan Datta, who has challenged the Centre’s decision to introduce a 0.4% MDR on eligible person-to-merchant (P2M) UPI transactions exceeding Rs 2,000.
The new framework is scheduled to take effect from October 15, 2026.
The MDR will be capped at Rs 300 for transactions of Rs 75,000 and above.
The petitioner has raised concerns over the legal basis and transparency of the new framework.
The plea also argues that the new charges could increase costs for merchants and potentially affect businesses operating on low margins.
What Changes Under New UPI MDR Rules?
The government has clarified that person-to-person (P2P) UPI transactions will remain completely free, regardless of the amount transferred. Merchant payments up to Rs 2,000 will also remain free.
Small merchants receiving up to Rs 1 lakh per month through UPI QR codes under the specified category will continue to receive zero-MDR treatment. The government estimates that around 96% of merchant transactions will remain unaffected.
For specified merchant transactions above Rs 2,000, MDR will be 0.4%. Essential and thin-margin sectors, including railways, telecommunications, insurance, fuel and agricultural inputs, will instead attract a flat Rs 5 MDR per transaction above Rs 2,000.
Capital-market transactions will attract an MDR of 0.02%, subject to a Rs 300 cap.
The government has also clarified that MDR is not a tax collected by the government or NPCI. It is distributed among participants in the payment ecosystem, including banks and payment service providers.
The Supreme Court’s notice seeks responses from the concerned authorities on the legal challenge. Further proceedings are expected to provide greater clarity on the new framework. (Maxim News)
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