NEW DELHI:

The Supreme Court on Monday declined to grant an interim stay on the proposed 0.4 per cent Merchant Discount Rate (MDR) on specified UPI merchant transactions above Rs 2,000, while seeking responses from the Centre, Reserve Bank of India and other concerned authorities.

The levy is scheduled to come into effect from October 15. The court was hearing a public interest litigation challenging the legality of the proposed charge.

The petition challenges the decision to impose MDR on person-to-merchant UPI transactions above the Rs 2,000 threshold. The Supreme Court has sought the responses of the Centre, RBI and NPCI, among others.

The court’s decision not to grant an interim stay means the proposed framework remains scheduled for implementation, subject to the outcome of the legal proceedings.

The proposed MDR has become a significant issue for India’s rapidly expanding digital payments ecosystem, particularly merchants and businesses accepting higher-value UPI payments.

The government has maintained that the framework does not amount to a charge imposed on ordinary users of UPI, while the legal challenge questions the basis and mechanism of the levy. The Supreme Court will examine the legal issues after receiving the responses from the authorities.