The new Merchant Discount Rate (MDR) on select UPI transactions has reached the Supreme Court, with a petitioner challenging the 0.4% charge on payments above Rs 2,000 made to merchants.
A public interest litigation (PIL) has been filed by petitioner Anjan Dutta, who has argued that the new system violates the fundamental rights to equality before the law and the right to trade.
The National Payments Corporation of India (NPCI) has announced that the 0.4% MDR on specified person-to-merchant (P2M) UPI transactions above Rs 2,000 will take effect from October 15, 2026. Person-to-person transactions will continue to remain free.
Petitioner Questions Legal Process
According to the petition, the new system is being introduced without proper discussion and the necessary legal process has not been followed.
The petitioner has also argued that the charges could place an additional burden on small businesses.
The PIL further claims that merchants seeking to avoid the additional UPI fees could ask customers to make payments in cash, which, according to the petitioner, could affect the goal of implementing a digital economy.
What Is The New UPI MDR?
Under the new framework, a 0.4% MDR will apply to specified UPI payments made to merchants when the transaction amount exceeds Rs 2,000. The charge will be capped at Rs 300 per transaction for payments of Rs 75,000 and above.
