A Public Interest Litigation (PIL) has been filed in the Supreme Court challenging the Centre’s new Merchant Discount Rate (MDR) charges on Unified Payments Interface (UPI) transactions above Rs 2,000. The petition was filed by advocate Anjan Datta against the Union government, Reserve Bank of India (RBI), National Payments Corporation of India (NPCI), and the UPI & Services Steering Committee. The MDR framework is set to take effect from October 15, 2026, according to medianama.com.
The PIL contests a Finance Ministry notification dated September 14, 2026, issued under Section 10A of the Payment and Settlement Systems Act, 2007, as amended this year. The new MDR framework imposes a 0.4% fee on person-to-merchant UPI transactions exceeding Rs 2,000, capped at Rs 300 for transactions above Rs 75,000. Specific sectors like railways, telecommunications, insurance, fuel, and agricultural inputs will incur a flat Rs 5 charge for payments above Rs 2,000, while capital-market transactions will face a 0.02% MDR capped at Rs 300. Person-to-person UPI transfers remain free, and small merchants receiving up to Rs 1 lakh monthly via UPI QR codes are exempt from MDR charges, medianama.com reported.
The petitioner argues that the MDR charges are arbitrary and could increase costs for both consumers and businesses. The introduction of MDR on higher-value UPI payments marks a shift from the previously free model, potentially impacting digital payment adoption and merchant margins. This move follows the 2026 amendment to the Payment and Settlement Systems Act and aligns with government efforts to regulate payment infrastructure costs. The PIL raises questions about the fairness and economic impact of the new fee structure in India’s rapidly growing digital payments market, medianama.com noted.
The Supreme Court has yet to schedule a hearing date for the PIL challenging the MDR framework. The Finance Ministry’s notification and the MDR rules will come into force on October 15, 2026, unless stayed by the court, medianama.com stated.