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No interim stay on Centre's decision to impose MDR on UPI payments: Supreme Court
The Supreme Court, however, sought responses from Centre and others on plea challenging imposition of MDR on UPI payments above ₹2,000.
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The Supreme Court on Monday refused to stay Centre's decision to impose MDR on specified Unified Payments Interface (UPI) person-to-merchant transactions of over ₹2,000 from October 15.
The top court, however, sought responses from Centre and others on plea challenging imposition of merchant discount rate (MDR) on UPI payments above ₹2,000.
Centre told the Supreme Court that 96 per cent people using gateway are exempt.
Issue is less legal and more technical, observed the Supreme Court, directing Centre, others to file their counter affidavit within four weeks.
The central government, earlier this month, announced a new UPI framework under which UPI payments of over ₹2,000 would attract a MDR of 0.4 per cent.
The government has maintained that there will be no impact on any person to person transactions. UPI will continue to remain completely free for all person-to-person transactions, irrespective of the amount transferred, according to the government.
The government had said approximately 96 per cent of all P2M (Person-to-merchant) transactions will remain unaffected.
MDR is a charge within the merchant payment ecosystem and is not a fee charged to customers making UPI payments. Banks have been advised to ensure merchants do not pass the MDR on to customers, while UPI apps are prohibited from imposing platform fees or hidden charges.
A government press release listing the FAQs has stated that the banks have been advised to ensure that merchants do not pass MDR charges on to customers. "UPI application providers are expressly prohibited from imposing platform fees or hidden charges," the press release stated.
Amid a political controversy over the MDR charges, the finance ministry on September 17 clarified that no foreign influence was behind the decision to impose the 0.4 per cent merchant discount rate.
The clarification came in response to allegations by Congress leader Rahul Gandhi and other opposition leaders who said that the government succumbed to US pressure in making the decision. HT learnt that the changes to the UPI regime were also mentioned in a Cabinet meeting.
“Some claims suggest the change is due to foreign influence. This is false. India’s UPI policy decisions are made independently, with the clear goal of building a self-sustaining, inclusive, and affordable digital payments ecosystem,” the finance ministry said in a post on X.
