Case over UPI transaction charges reaches Supreme Court:Hearing tomorrow on plea challenging decision to impose 0.4% MDR

The Supreme Court will hear on 28 September a public interest litigation challenging charges on UPI payments. The government has decided to impose a 0.4% fee on payments above 2,000. The new system is to come into effect from 15 October. The petition seeks the cancellation of these charges. CJI Suryakant’s three-judge bench to hear the case According to the court’s cause list, the case will be heard by a bench comprising Chief Justice of India (CJI) Suryakant, Justice Joymalya Bagchi and Justice V. Mohana. Lawyer Anjan Dutta has filed the public interest litigation. Government accused of imposing fee without consultation or concrete legislation The petition states that the government fixed the fee without consulting the public or framing any concrete rules. In addition, a provision (Section 10A) of the “Payment and Settlement Systems Act, 2007” has also been challenged in court. It is alleged that the provision gives the government the discretion to decide which digital payments will remain free and which will incur charges. Questions raised over differences between RuPay card and UPI rules The petition has termed the distinction made between RuPay debit cards and UPI incorrect. According to the petitioner, the government has continued the ‘zero-charge’ facility for payments made through RuPay cards, but has imposed a fee on UPI payments exceeding ₹2,000. Calling this an arbitrary decision, the petition says it will increase the burden on small businesses operating on low margins and also affect the pockets of ordinary customers. New UPI charge rules: How will they affect businesses? What is the merchant discount rate? MDR is the fee that a shopkeeper or merchant pays to banks and payment companies for using the facility to accept payments through cards or UPI. This charge is collected to cover the cost of operating the payment system and machines properly. Importantly, the merchant has to pay this fee; it is not charged to the customer.