Supreme Court refuses to stay Centre's decision to levy MDR on merchant UPI transactions over ₹2,000

The Supreme Court on Monday refused to stay the Central government's recent decision to levy Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions exceeding ₹2,000 [Anjan Datta v. Union of India]. .A Bench of Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V Mohana however asked the government to submit an affidavit explaining the basis for the new framework.The Court passed the order on Public Interest Litigation (PIL) petition challenging the decision..Additional Solicitor General N Venkataraman told the Court person-to-person UPI transfers will remain completely free and around 96 percent of merchant transactions will remain unaffected..Under the announced framework, person-to-person (P2P) transfers and person-to-merchant (P2M) payments up to ₹2,000 remain free. However, a 0.4% MDR applies to P2M payments above ₹2,000, with transactions of ₹75,000 and above capped at ₹300. Specified essential sectors attract a flat ₹5 charge, capital-market payments carry a 0.02% levy and merchants receiving up to ₹1 lakh per month remain exempt..The petition before the Court said that despite official assertions that merchants cannot pass these costs to consumers, the fee on qualifying receipts will inevitably enter price structures, reduce working capital, and induce refusal of UPI payments and transaction-splitting among low-margin traders.The petition assailed the proposed MDR framework scheduled to take effect from October 15. It highlighted that while UPI payments above ₹2,000 have been exposed to levies, identical "no-charge" protection continues to be extended to RuPay-powered debit cards without any monetary ceiling.The plea assailed the creation of a nationwide compulsory payment burden without disclosing cost studies, underlying methodology, or enforceable anti-pass-through safeguards.The PIL, filed by advocate Anjan Datta, further contended that thresholds like the ₹2,000 transaction mark and ₹1 lakh monthly receipt ceiling are unsupported by disclosed data.A transaction of ₹2,001 attracts a percentage fee while ₹2,000 does not, creating financial "cliffs" that distort market behaviour and discriminate between similarly situated merchants while favouring very high-value transactions via the cap, it was submitted..[Read Live Coverage]