New Delhi: The Supreme Court of India on Monday, 28 September 2026, refused to grant an interim stay on the Union Government's decision to levy a Merchant Discount Rate (MDR) on specified UPI person-to-merchant transactions exceeding ₹2,000. Hearing a Public Interest Litigation (PIL) filed by advocate Anjan Datta, a bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi, and Justice V. Mohana declined to halt the implementation of the new framework, which is scheduled to take effect from 15 October 2026. The apex court observed during proceedings that the primary grievance surrounding the proposed charge structure is fundamentally "less legal and more technical" in nature, opting against suspending the policy ahead of a full judicial review.

Four-Week Deadline for Counter-Affidavits

While permitting the upcoming policy rollout to proceed without interruption, the top court formally issued notices to the regulatory authorities involved in the digital payments ecosystem. The Supreme Court directed the Centre, the Reserve Bank of India (RBI), and the National Payments Corporation of India (NPCI) to file their counter-affidavits within four weeks. The petitioner challenged the Union Finance Ministry’s September notifications, contending that the 0.4 per cent MDR on high-value commercial payments was introduced without clear statutory guidelines, public consultation, or empirical impact assessments. The plea further raised concerns over regulatory discrimination, questioning why zero-charge protections were preserved for RuPay debit cards without monetary caps while being removed for UPI payments above ₹2,000.

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Centre Highlights Exemption for 96 Per Cent of Gateway Users

Defending the framework before the Supreme Court, the Union Government affirmed that the new MDR structure would not burden everyday citizens or micro-businesses. Government representatives informed the bench that over 96 per cent of users relying on the UPI gateway will remain completely exempt from any charges. The Centre clarified that all person-to-person (P2P) transfers remain permanently free, alongside person-to-merchant payments up to ₹2,000 and small merchants receiving up to ₹1 lakh monthly via UPI QR codes. The government reiterated that the 0.4 per cent MDR is a merchant-side operational fee capped at ₹300 per transaction, designed to support digital payment infrastructure rather than a direct levy on retail consumers.