India's Supreme Court Questions UPI Merchant Discount Rate
India's Supreme Court has sought explanations from the central government, the Reserve Bank of India (RBI), and the National Payments Corporation of India (NPCI) regarding the Merchant Discount Rate (MDR) levied on UPI transactions.
The Supreme Court of India is examining the nature of the Merchant Discount Rate (MDR) applied to Unified Payments Interface (UPI) transactions, specifically those exceeding 2,000 rupees (approximately $24 USD).
The court has requested responses from the central government, the RBI, and the NPCI, the body responsible for UPI's operations in India. The inquiry stems from a petition challenging the MDR.
Justice Joymlya Bagchi questioned whether the charge constitutes a tax or a fee, asking for the executive basis for such a levy if it were not a fee. The government's Additional Solicitor General argued that MDR is not a tax but a cost-sharing mechanism among payment providers, banks, and service providers.
NPCI's Managing Director and CEO, Dilip Asbe, had previously stated that the MDR is necessary to cover increased costs related to strengthening UPI's infrastructure against cyber threats. These costs have reportedly risen significantly, impacting budgets for hardware upgrades.