SUPREME COURT REFUSES TO STAY UPI TRANSACTION FEE, SEEKS CENTRE’S RESPONSE

September 28, 2026

The Supreme Court on Monday declined to grant an interim stay on the Centre’s decision to introduce a Merchant Discount Rate (MDR) on specified Unified Payments Interface (UPI) transactions exceeding ₹2,000. The court issued notices to the Centre, the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI), seeking their responses to a petition challenging the revised fee framework.

A bench headed by Chief Justice of India Surya Kant, comprising Justices Joymalya Bagchi and V. Mohana, heard the public interest litigation filed by advocate Anjan Datta. The petitioner has challenged the legal basis of the revised framework, arguing that the introduction of the levy lacks adequate statutory safeguards, transparency and public consultation. The court directed the respondents to submit their replies within four weeks.

Under the revised framework, scheduled to take effect from October 15, eligible person-to-merchant UPI transactions above ₹2,000 will attract an MDR of 0.4 per cent, capped at ₹300 for transactions of ₹75,000 and above. Certain essential and thin-margin sectors, including railways, telecommunications, insurance and fuel, will be subject to a flat charge of ₹5 per eligible transaction. Specified capital-market transactions will attract a rate of 0.02 per cent, subject to a cap of ₹300

The Centre has maintained that the revised framework will not impose charges on consumers making UPI payments. Person-to-person transactions will remain free regardless of the amount, while merchant transactions up to ₹2,000 and eligible transactions by small merchants will also continue to be exempt. According to the Finance Ministry, approximately 96 per cent of merchant transactions will remain unaffected by the revised arrangement.

During the hearing, the petitioner’s counsel sought an interim suspension of the framework until the case is decided. The court declined to grant the request at this stage and asked the government to explain the legal character and basis of the levy through an affidavit. The matter will proceed after the respondents submit their replies, while the October 15 implementation date remains unchanged for now.