A Public Interest Litigation has been filed in the Supreme Court challenging the Centre's new Merchant Discount Rate (MDR) framework for Unified Payments Interface (UPI) transactions above Rs 2,000, with the petitioner seeking a stay on its implementation from October 15.
The petition, filed by advocate Anjan Datta and reviewed by NDTV Profit, names the Union of India, the Reserve Bank of India (RBI), the National Payments Corporation of India (NPCI), and the UPI and Services Steering Committee as respondents.
The PIL seeks quashing of the September 14 notification and the September 15 framework governing MDR on specified UPI merchant transactions. The petitioner has also sought a stay on the rollout of the new framework pending adjudication by the Supreme Court.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
The petition challenges the basis for introducing MDR on UPI transactions above Rs 2,000, alleging that the framework is against consumer interest and places an unreasonable burden on merchants.
The plea further alleges that, despite safeguards stating that MDR should not be passed on to customers, the additional cost could ultimately be transferred to consumers through higher prices or other charges. It argues that the framework does not provide adequate enforcement mechanisms to ensure that merchants and payment intermediaries do not pass on the cost.
ALSO READ: S&P 500 To Tumble 10% After Fed Hike? Here's What History Suggests
A key issue raised in the petition is the classification between UPI and RuPay transactions. The petitioner alleges that UPI transactions above Rs 2,000 have been excluded from the zero-MDR protection, while RuPay debit card transactions continue to enjoy such protection without a similar value-based cap.
The PIL questions the rationale for selecting Rs 2,000 as the threshold for UPI MDR and alleges that the distinction creates an arbitrary classification between payment instruments.
The petition has also sought disclosure of the cost studies, underlying data and records of the committees relied upon while framing the new MDR policy. It alleges that the framework was introduced without adequate transparency and without public consultation.
Under the new framework, MDR will apply from October 15 to specified person-to-merchant UPI transactions above Rs 2,000. The broader framework includes different rates and caps depending on the category and value of the transaction, while person-to-person payments remain outside the MDR regime.
The government has maintained that the new charges are aimed at creating a sustainable revenue model for the UPI ecosystem, while safeguards have been put in place to prevent the MDR burden from being passed on to customers. The new framework also provides for a fund to support small merchants and allocates a portion of MDR collections towards strengthening the UPI ecosystem.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
