SC questions proposed UPI MDR, seeks Centre, RBI and NPCI affidavits
The Supreme Court has scrutinised the proposed 0.4% merchant discount rate on UPI P2M payments above ₹2,000. The charge, due from October 15 and capped at ₹300 for transactions of ₹75,000 and above, could raise digital-payment acceptance costs for retailers if implemented.
The channel move
Supreme Court questioned the government’s 0.4 per cent UPI MDR on P2M payments above ₹2,000 and sought affidavits from the Centre, RBI and NPCI. The charge is due from October 15, capped at ₹300 for transactions of ₹75,000 and above.
Channel facts
- 0.4 per cent
- ₹2,000
- three-judge
- September 14
- October 15
- ₹75,000
- ₹300
- 96 per cent
- 4 per cent
- ₹5
- ₹75000
- half percent
- four weeks
- Section 10A
- 2007
What it means for online and offline
Payments, POS and acquiring platforms should assess partnership and product opportunities around MDR-compliance tools, merchant pricing and alternative payment acceptance if the October 15 proposal proceeds.
Signals to track
- Supreme Court directions, interim stay, hearing dates and affidavits from the Centre, RBI and NPCI.
- Confirmation of whether the October 15 effective date remains operative.
- Final scope: transaction threshold, rate, ₹300 cap, merchant exclusions, category-specific treatment and applicability to online versus offline P2M.
- RBI or NPCI clarification on whether merchants may surcharge, offer payment-method discounts or impose minimum UPI transaction values.
- Acquirer, PSP and large-platform announcements on absorbing, sharing or passing through the MDR.
- UPI transaction-value mix shifts, especially substitution away from UPI for baskets just above ₹2,000.
- Model UPI P2M cost exposure by average order value, transaction mix and merchant category, isolating payments above ₹2,000.
- Prepare checkout and POS rules for potential surcharge, discount or payment-steering policies, subject to RBI and consumer-protection requirements.
- Renegotiate acquiring and gateway contracts for MDR pass-through, volume rebates and capped-fee treatment on high-value transactions.
- Review omnichannel tender strategy: compare UPI, debit cards, credit cards, BNPL, cash-on-delivery and account-transfer economics for high-value baskets.
- Prepare customer communications and staff scripts to avoid friction if payment acceptance policies change at launch.
The counter-case
The headline may overstate the likelihood and retail impact of a new UPI MDR. Supreme Court scrutiny and requests for affidavits are procedural steps, not evidence that the proposed fee will survive, begin on October 15, or apply broadly. Even if introduced, the 0.4% charge only affects P2M transactions above ₹2,000, is capped at ₹300, and could be absorbed by banks, payment aggregators, or offset through commercial incentives rather than passed fully to merchants. Large retailers may also steer payments toward lower-cost rails or renegotiate acquiring terms.