Public interest litigation challenges charges on UPI payments over 2,000 rupees

A public interest litigation (PIL) has been filed in India's Supreme Court challenging the central government's decision to allow merchant discount rates (MDR) on specific Unified Payments Interface (UPI) payments made to merchants exceeding 2,000 rupees. The petitioner argues that the new fee structure is arbitrary and could increase costs for consumers and businesses.

The petition, filed by advocate Anjan Datta, names the Union government, the Reserve Bank of India (RBI), and the National Payments Corporation of India (NPCI) as respondents. The new framework is slated to take effect from October 15, 2026.

The challenge targets a September 14 notification from the Finance Ministry, which permits MDR on person-to-merchant (P2M) UPI transactions above 2,000 rupees. A 0.4% MDR, capped at 300 rupees, will apply. Certain sectors like railways, telecommunications, insurance, and fuel will have a flat charge of 5 rupees for transactions over 2,000 rupees. Capital market transactions face a 0.02% MDR.

Person-to-person UPI transfers will remain free of charge. Small merchants receiving up to 100,000 rupees monthly via UPI QR codes are exempt from MDR. The PIL questions the differentiation between UPI and RuPay debit card transactions, noting RuPay cards do not have a similar transaction limit for fee exemptions, arguing this violates Article 14 of the Constitution.

The petitioner seeks to quash the notification and the MDR framework. Alternatively, the plea requests the government to reconsider the framework after consultations, publish relevant data, and conduct an independent RBI review with safeguards for small businesses.