Delhi: The Supreme Magistrate on Monday heard a petition challenging the Central Government's visualization to impose Merchant Discount Rate (MDR) on UPI payments. The magistrate has currently refused to put an interim stay on the new fee structure but has issued notices to the concerned parties including the Central Government, Reserve Wall of India (RBI) and National Payments Corporation of India (NPCI). A seat headed by Chief Justice Surya Kant asked to put the matter up for hearing without four weeks and file a counter affidavit.
Why did the Supreme Magistrate refuse to impose an interim stay?
The Supreme Magistrate did not winnow the demand to ban the MDR system at this stage. During the hearing, the seat indicated that the matter was mainly of a technical nature. The magistrate has asked the centre to sieve the legal and practical understructure of the new fee structure. Now other concerned parties including the Centre, will have to file their reply within four weeks.
On which payments of UPI are preparations to impose MDR?
Under the Centre's new framework, MDR is to be workable on unrepealable person-to-merchant (P2M) UPI transactions from October 15, 2026. MDR has been set at 0.4 percent on eligible transactions whilom Rs 2,000 in the unstipulated category. Its maximum limit has been kept at Rs 300 for transactions of Rs 75,000 or more.
However, this does not proffer to all UPI payments. It has been said that the fee on person-to-person i.e. P2P transfer will be zero. It was moreover told by the government that under the new structure, well-nigh 96 percent of the transactions will remain out of the telescopic of charges.
What will be the rules for essential sectors like railways and petrol?
Separate arrangements have been made for essential and low margin sectors like railways, telecom, insurance, fuel and agricultural inputs. A unappetizing MDR of Rs 5 has been stock-still on eligible UPI transactions whilom Rs 2,000 in these areas. There is a provision of 0.02 percent MDR on payments made through bilateral funds, securities and stock brokers and dealers, the maximum limit of which will be Rs 300.
Who has challenged the visualization to impose MDR?
Advocate Anjan Dutta has filed a public interest litigation in the Supreme Magistrate versus this system. The petition challenges the Centre's notification of September 14 and the MDR framework spoken on September 15. The petitioner argues that the fee regime has been brought in without unobjectionable statutory protection, transparency and public consultation. The petition moreover questions the ramble validity of the amended Section 10A of the Payment and Settlement Systems Act, 2007.
How will the value received from MDR be distributed?
According to the new structure, the value received from MDR will be distributed among variegated parties associated with the UPI ecosystem. According to the government, its share will be given to the customer's bank, payment gateway, UPI app and sponsor bank. The purpose of this wattle is said to be to share the financing of payment infrastructure associated with large merchant transactions.
Now what will happen next in the Supreme Court?
At present, there is no interim ban on the MDR system and the new structure of the centre is likely to be implemented from October 15. However, the final position in this matter will be well-spoken without remoter hearing by the Supreme Magistrate and response of the Centre, RBI and NPCI. The magistrate has given four weeks' time to the concerned parties.
