Supreme Court petition challenges UPI MDR framework ahead of October 15 rollout
A petition seeks to scrap the proposed merchant-fee regime, arguing costs could be passed to consumers. The framework sets 0.4% MDR on specified UPI merchant payments above ₹2,000, while exempting P2P payments, lower-value transactions and qualifying small merchants.
What happened
A Supreme Court petition challenges the new UPI merchant-discount-rate framework, arguing merchants may pass costs to consumers. The regime applies 0.4% MDR to
Key facts
- 0.4% MDR on specified merchant UPI transactions above ₹2,000
- ₹300 maximum MDR cap for transactions of ₹75,000 and above
- ₹5 flat MDR for eligible essential and thin-margin sectors above ₹2,000
- 0.02% MDR for capital-market transactions, capped at ₹300
- Zero MDR for small merchants receiving up to ₹1 lakh monthly through eligible UPI QR transactions
- About 96% of P2M transactions expected to remain unaffected
- MDR expected to apply to about 4% of merchant transactions
Why this matters
Reassess payment-stack partnerships and acquisition targets for exposure to UPI merchant-fee monetization, pending the Supreme Court challenge and rollout clarity.
What to watch
- Supreme Court admission, interim stay, hearing date or direction to the government/NPCI.
- NPCI, RBI or finance ministry clarification on applicability, merchant qualification, transaction aggregation and effective date.
- Acquirer and payment-aggregator merchant notices specifying MDR collection mechanics and settlement changes.
- Evidence of retailers raising minimum order values, adding payment fees, discounting alternative rails or splitting payments.
- Monthly UPI mix shifts in transactions above ₹2,000 and changes in card, net-banking and wallet usage.
- Model exposure by UPI ticket size, merchant category and store format; isolate transactions above ₹2,000 that would become chargeable.
- Review checkout design and payment-routing rules to avoid unlawful or customer-hostile steering while preserving margin on high-value baskets.
- Renegotiate PSP/acquirer contracts for MDR pass-through, settlement terms, dispute handling and transaction-level reporting.
- Prepare customer communication and pricing contingencies for large-ticket categories such as electronics, furniture, travel and premium grocery.
- Monitor whether competitors introduce UPI surcharges, cash/card incentives or basket-splitting restrictions before matching any move.