PIL in Supreme Court challenges 0.4% MDR on UPI payments above ₹2,000

A public interest litigation has been filed in the Supreme Court challenging the Centre's decision to levy a 0.4 per cent merchant discount rate (MDR) on UPI person-to-merchant transactions above ₹2,000. The plea by advocate Anjan Datta questions the September 14 notification and the September 15 MDR framework, effective October 15. A ₹300 cap applies to transactions of ₹75,000 and above. The petitioner alleges the levy lacks statutory safeguards, transparency and public consultation, and is arbitrary and discriminatory.

Written by AI from Hindustan Times — India · not yet reviewed by an editor · Published 16 Sept 2026, 8:18 pm IST

Source

Hindustan Times — India · read the original report ↗

#upi#mdr#supreme court#digital payments#pil

Desk check · compared with the source

What the desk checked (5)

A 0.4% MDR applies to UPI person-to-merchant transactions above ₹2,000 from October 15. — Figure and date appear in the source, attributed to the government's framework; no notification text quoted.
The 0.4% MDR is capped at ₹300 for transactions of ₹75,000 and above. — Figure appears in the source, attributed to the petition.
A flat ₹5 MDR applies above ₹2,000 in railways, telecom, insurance, fuel and agricultural inputs; capital-market transactions attract 0.02% capped at ₹300. — Details appear in the source as described in the petition.
PIL filed by advocate Anjan Datta challenges the September 14 notification and September 15 MDR framework. — Named petitioner and dates appear in the source; court response not reported.
Framework is arbitrary, discriminatory and lacks Official Gazette publication. — Allegation attributed to the petitioner; unverified and not adjudicated.

Written by AI from Hindustan Times — India · not yet reviewed by an editor · How we use AI · Report an error

Analysts’ view opinion

AI Political Analyst

A "free" UPI has been one of the Centre's strongest political assets in its Digital India story; the 0.4 per cent MDR on merchant transactions above ₹2,000 is the first significant crack in that narrative. The petition is a legal move, but its political value is larger — it hands the opposition a ready-made issue built around shopkeepers and small traders, a sensitive voter constituency. That the government has already publicly rejected a "foreign influence" charge in this row suggests the debate has already moved from the technical to the political arena.

Keeping transactions up to ₹2,000 and all person-to-person transfers free, plus exempting small merchants receiving up to ₹1 lakh a month, reads as a deliberate attempt to limit the political fallout.
The contested question is where the "small merchant" line is drawn — the petition's argument that thin-margin businesses just above that line absorb the cost is an easy claim to campaign on.
The allegation that rates, thresholds and caps were set through a press release without the full operative instrument being published in the Official Gazette exposes the Centre to criticism on transparency and executive overreach.
The contrast between charging UPI while continuing uncapped no-charge protection for RuPay debit cards invites the "two yardsticks in one policy" line of attack.
With the October 15 rollout close, if no immediate judicial relief comes, pressure is likely to shift to the political and lobbying track rather than the courtroom.

What to watch — Watch whether the Supreme Court entertains the plea and grants any interim stay, and how strongly trader bodies and opposition parties adopt this as a campaign issue.

The story establishes only that a petition has been filed — it does not establish that the court has admitted it, passed any order, what the Centre's response is, or how many merchants would actually be affected.

Deep dive

Research brief · 8 facts · 4 dates · exam-ready

The brief

Context

The Centre has decided to levy a merchant discount rate (MDR) on Unified Payments Interface (UPI) person-to-merchant (P2M) transactions above ₹2,000, ending the blanket zero-charge regime for such payments. The framework, announced on September 15 following a September 14 notification, takes effect from October 15. A public interest litigation filed in the Supreme Court by advocate Anjan Datta challenges this, arguing the levy came without statutory safeguards, transparency or public consultation, and attacks the constitutional validity of the amended Section 10A of the Payment and Settlement Systems Act, 2007.

Key facts

A 0.4 per cent MDR is to be levied on general UPI person-to-merchant (P2M) transactions exceeding ₹2,000, effective October 15.
The 0.4 per cent MDR is subject to a cap of ₹300 for transactions of ₹75,000 and above.
No MDR is to be levied on UPI transactions of up to ₹2,000, and all person-to-person transfers remain free.
A flat ₹5 MDR applies to transactions above ₹2,000 in essential and thin-margin sectors including railways, telecommunications, insurance, fuel and agricultural inputs.
Capital-market transactions attract an MDR of 0.02 per cent, capped at ₹300.
Small merchants receiving up to ₹1 lakh per month through UPI QR codes are exempted.
The PIL, filed by advocate Anjan Datta, challenges the Centre's September 14 notification and the MDR framework announced on September 15.
The plea challenges the constitutional validity of the amended Section 10A of the Payment and Settlement Systems Act, 2007.

Timeline

September 14Centre issues the notification challenged in the PIL.
September 15MDR framework for UPI person-to-merchant transactions announced.
October 15The 0.4 per cent MDR framework is stated to come into effect.
Date not stated in the sourcePIL filed in the Supreme Court by advocate Anjan Datta challenging the MDR levy.

Who has a stake

Union government (Centre) — Issued the September 14 notification and September 15 MDR framework; must defend its statutory basis and the absence of Gazette publication of the operative instrument.
Supreme Court — Must decide the PIL seeking quashing or suspension of the MDR framework and the challenge to amended Section 10A of the PSS Act, 2007.
Advocate Anjan Datta (petitioner) — Seeks quashing or suspension of the MDR on UPI transactions above ₹2,000, or reconsideration after transparent consultation and impact assessment.
Merchants, especially low-margin and micro and small enterprises — Face the 0.4 per cent levy on P2M transactions above ₹2,000; petitioner seeks safeguards for micro and small enterprises.
Consumers — Plea raises concerns about possible indirect consumer burden and digital exclusion.
Reserve Bank of India — Plea seeks an independent review of the framework by the RBI and the Union government.
RuPay debit card ecosystem — Notification continues no-charge protection for RuPay debit cards without a monetary ceiling, a distinction the petitioner questions.

Why it matters

UPI is the backbone of India's retail digital payments, and any charge on merchant transactions touches millions of small businesses and their customers. The case tests whether such charges can be fixed through a press release rather than a published Official Gazette instrument, and how much unguided discretion the executive may hold under Section 10A of the Payment and Settlement Systems Act. Its outcome will shape the cost, transparency and inclusiveness of digital payments.

UPSC angle

Prelims pointers

MDR (merchant discount rate) of 0.4 per cent on UPI P2M transactions above ₹2,000, effective October 15; cap of ₹300 for transactions of ₹75,000 and above.
No MDR on UPI transactions up to ₹2,000; all person-to-person (P2P) transfers remain free.
Flat ₹5 MDR on above-₹2,000 transactions in railways, telecom, insurance, fuel and agricultural inputs; 0.02 per cent (capped at ₹300) on capital-market transactions.
Small merchants receiving up to ₹1 lakh per month via UPI QR codes are exempted.
Section 10A of the Payment and Settlement Systems Act, 2007 (as amended) is the provision under constitutional challenge in the PIL.
RuPay debit cards retain no-charge protection without any monetary ceiling under the notification.

Mains framing

The PIL against the 0.4 per cent MDR on UPI person-to-merchant transactions above ₹2,000 raises a classic question of delegated legislation and procedural fairness in economic regulation. The petitioner's case rests on three planks: that the amended Section 10A of the Payment and Settlement Systems Act, 2007 confers unguided power on the executive to choose which electronic payment modes get no-charge protection; that rates, thresholds, caps and sectoral classifications were fixed through what is described as a press release without publication of the complete operative instrument in the Official Gazette; and that treating UPI differently from RuPay debit cards, which retain no-charge protection without a monetary ceiling, is arbitrary and discriminatory. The government's design does contain graduated relief — exemption below ₹2,000, free P2P transfers, a ₹1 lakh monthly QR exemption for small merchants, a flat ₹5 rate for thin-margin sectors like railways, telecom, insurance, fuel and agricultural inputs, and a ₹300 cap — but the plea argues low-margin merchants may still absorb costs, with indirect consumer burden and digital exclusion as possible consequences. The way forward suggested in the petition itself is transparent consultation, publication of empirical data and an impact assessment, safeguards for micro and small enterprises, and an independent review by the RBI and the Union government.

Key terms

MDR (Merchant Discount Rate): A fee charged on a merchant for accepting a digital payment; here 0.4 per cent on UPI P2M transactions above ₹2,000.
P2M and P2P transactions: Person-to-merchant payments (now subject to MDR above ₹2,000) versus person-to-person transfers, which remain free.
Section 10A, Payment and Settlement Systems Act, 2007: The amended provision, challenged in the PIL, that empowers the executive to decide which electronic payment modes get no-charge protection.
Public Interest Litigation (PIL): A petition filed in a constitutional court in the public interest; here filed in the Supreme Court by advocate Anjan Datta.
Official Gazette publication: Formal publication of an operative legal instrument; the plea alleges the complete instrument prescribing the charges was not so published.
RuPay debit card no-charge protection: Continued exemption from charges for RuPay debit card payments, without any monetary ceiling, unlike UPI above ₹2,000.

Practice questions

Critically examine whether charges on digital payment modes can validly be fixed through executive announcements rather than instruments published in the Official Gazette.
Discuss the likely impact of a 0.4 per cent MDR on UPI person-to-merchant transactions above ₹2,000 on small merchants, consumers and digital financial inclusion.
Does the amended Section 10A of the Payment and Settlement Systems Act, 2007 amount to excessive delegation of legislative power? Analyse with reference to the differential treatment of UPI and RuPay debit cards.

Grounded only in the source report — figures and dates are the source's, not inferred.

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