Supreme Court allows UPI MDR on payments over ₹2,000, seeks govt response
The Supreme Court refused to stay the government’s plan to levy a merchant discount rate on UPI transactions above ₹2,000 and asked the Centre, RBI and NPCI to reply within four weeks. The levy, set to start on October 15, will charge 0.4% on eligible merchant UPI payments above ₹2,000, capped at ₹300 per transaction.
Payments to railways, telecom, insurance and fuel will attract a flat ₹5 charge, while capital‑market payments will incur a 0.02% levy, also capped at ₹300. Merchants receiving up to ₹1 lakh per month via UPI QR codes remain exempt from the charge. In August, UPI handled 2.451 billion transactions worth ₹29.82 lakh crore. Peer‑to‑peer UPI transfers will continue to be free of charge under the new framework.
“Asbe estimated that the new MDR framework could generate ₹13,000 Cr to ₹15,000 Cr in its first year,” Dilip Asbe, MD and CEO of NPCI said.
The framework follows amendments to the Payment and Settlement Systems Act, 2007, after a September 14 gazette notification specified RuPay-powered debit cards and UPI transactions up to ₹2,000 as exempt modes. Earlier, the PSSA barred banks from imposing charges on UPI, but the amendment allowed the Centre to set exempt thresholds, leading to the ₹2,000 limit.
What we know
The Supreme Court refused to stay MDR on UPI payments above ₹2,000.
The framework is scheduled to take effect from October 15.
Eligible P2M transactions above ₹2,000 will attract 0.4% MDR, subject to a ₹300 cap, which is reached at a transaction value of ₹75,000.
Small merchants receiving up to ₹1 Lakh a month through UPI QR codes will remain exempt.
UPI processed 2,451 Cr transactions worth ₹29.82 Lakh Cr in August.