UPI Merchant Fees Advance
Supreme Court Declines to Halt UPI Fee Rollout While Seeking Responses
Anonymous
India’s Supreme Court declined to halt a Merchant Discount Rate (MDR) framework due to take effect on October 15 and sought responses within four weeks from the Centre, the RBI and NPCI to a legal challenge. The framework sets a 0.4% charge on specified person-to-merchant UPI transactions above ₹2,000, capped at ₹300 for transactions of ₹75,000 or more; person-to-person transfers and smaller payments remain free, while some sectors have different rates and some small merchants are exempt. The government says the MDR is a service charge shared among payment ecosystem participants, not money collected by the government, and merchants should not pass it on to customers. The petitioner argues the framework lacks adequate legal authority, safeguards and transparency and was introduced without proper public consultation; the court will consider the challenge without suspending the rollout.
Key Points
1
The new framework ends nearly six years of fully free UPI payments, according to Moneycontrol.
2
Essential and thin-margin sectors—including railways, telecom, insurance, fuel and agricultural inputs—will pay a flat ₹5 per transaction above ₹2,000, while payments into mutual funds, securities and through stockbrokers or dealers will incur a 0.02% MDR, capped at ₹300.
3
Person-to-person transfers account for 37% of UPI transaction volume and 70% of transaction value, and will remain free regardless of transaction size.
4
The Finance Ministry said UPI app providers are expressly prohibited from imposing platform fees or hidden charges; the government has also advised banks to ensure merchants do not pass the MDR on to customers.
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