SC refuses stay on UPI MDR, centre must file affidavit

The Supreme Court on 28 September refused to stay the Centre’s decision to levy a 0.4% Merchant Discount Rate (MDR) on specified UPI person-to-merchant transactions above Rs 2,000, but directed the Centre, RBI and NPCI to file counter affidavits within four weeks. A bench headed by Chief Justice Surya Kant questioned the legal character of the MDR, asking whether it is a tax or a fee. The court said the issue was ‘less legal and more technical’. Additional Solicitor General N Venkataraman told the court the charge applies from 15 October, that 96% of transactions are exempt, and that not a single rupee goes to the government.

Meanwhile, the All India Mobile Retailers Association (AIMRA) called a nationwide ‘No UPI Day’ on 2 October, with retailers covering QR codes in black cloth. However, on 30 September, after a meeting with Finance Minister Nirmala Sitharaman, traders’ bodies including AIMRA and CAIT announced the protest has been called off. Sitharaman assured them the concerns would be duly considered. The delegation proposed a phased MDR of 0.20% in FY27, rising annually to 0.40%, and sought raising the transaction threshold from Rs 1 lakh to Rs 5 lakh.