A Public Interest Litigation (PIL) has been lodged with the Supreme Court, contesting the Central Government’s move to impose a Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions exceeding ₹2,000. The petition, filed under Anjan Datta v. Union of India, challenges the proposed MDR policy slated for implementation on October 15, 2026. The petitioner argues that while UPI transactions above the ₹2,000 threshold will incur fees, RuPay-powered debit card transactions continue to enjoy fee-free status, irrespective of the transaction amount.
The litigation emphasizes that the challenge is not against maintaining a secure payment infrastructure, but rather against the imposition of a nationwide payment burden without transparency regarding cost studies, the underlying methodology, or enforceable anti-pass-through measures. According to the new framework, person-to-person (P2P) and person-to-merchant (P2M) payments up to ₹2,000 will remain free of charge. However, for P2M transactions above ₹2,000, a 0.4% MDR will be applied, with a maximum of ₹300 for transactions over ₹75,000. Essential sectors are subject to a flat fee of ₹5, while capital-market payments incur a 0.02% charge. Merchants with monthly receipts up to ₹1 lakh remain exempt from these charges.
The petitioner argues that despite official claims that merchants are prohibited from transferring these costs to consumers, the fees will likely affect pricing structures, reduce working capital, or lead to the rejection of UPI transactions and splitting of payments among merchants with thin profit margins. The plea states, “A bare direction against an expressly recognized economic consequence does not eliminate the burden.”
Advocate Anjan Datta, who filed the PIL, contends that the thresholds, such as the ₹2,000 transaction limit and ₹1 lakh monthly receipt exemption, lack supporting data. The distinction between a ₹2,001 transaction, which incurs a fee, and a ₹2,000 transaction, which does not, creates financial disparities that could distort market behavior and unfairly discriminate against certain merchants while favoring high-value transactions due to the cap.
Furthermore, the petitioner labels the multi-tiered levy as “manifestly arbitrary,” arguing it violates Articles 14 and 19(1)(g) of the Indian Constitution. The petitioner asserts that determining financial charges through press releases rather than through notified statutory rules results in the excessive delegation of crucial fiscal responsibilities to an unofficial steering committee.
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The plea also raises concerns over the legal validity, suggesting that a nationwide mandatory MDR cannot rely solely on press releases or FAQs. The petitioner seeks the disclosure of all official documents, the annulment of the MDR framework for transactions over ₹2,000, or alternatively, a transparent consultation process grounded in empirical impact studies and independent review by the Reserve Bank of India (RBI).
