MDR on UPI: SC to hear plea challenging imposition on September 28
The Supreme Court of India is set to hear a challenge against the government's decision to impose a 0.4% Merchant Discount Rate (MDR) on UPI transactions exceeding ₹2,000. The petitioner argues the levy lacks statutory safeguards and transparency.
Why it matters
This case could significantly impact the digital payment ecosystem in India, which has historically relied on free transactions to drive adoption.
The Supreme Court will on Monday (September 28, 2026) hear a plea challenging the Centre's decision to impose a Merchant Discount Rate (MDR) on specified UPI person-to-merchant transactions of over ₹2,000.
Ending nearly six years of fully free UPI payments, the government has introduced a 0.4% fee on transfers worth over ₹2,000 made to merchants through the UPI platform from October 15 while explicitly ring-fencing everyday person-to-person transactions and small payments from any charge.
The MDR will be capped at ₹300 for payments of ₹75,000 and above.
Essential and thin-margin sectors — railways, telecom, insurance, fuel, and agricultural inputs — will pay a flat MDR of ₹5 per transaction above ₹2,000.
Payments into mutual funds, securities, and through stockbrokers and dealers will attract 0.02% MDR, also capped at ₹300.
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