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Asks RBI to Mediate PayU's ₹6.88 Crore IRF Dispute with Banks,
The has directed the to step in as a mediator in a dispute between payment aggregator and multiple banks and over deductions of ₹6.88 crore from PayU's settlement accounts. Justice Subramonium Prasad, on , ordered the parties to maintain pending the 30-day mediation process, effectively freezing all claims and deductions while the RBI facilitates a resolution.
A ₹6.88 Crore Dispute Over Merchant Codes
The conflict arises from allegations of incorrect assigned to merchants onboarded by PayU. MCCs are four-digit codes that determine the interchange fee payable by acquiring banks to issuing banks. PayU argued that it merely collects and verifies merchant information, while the acquiring banks independently assign the MCCs. Despite this, deducted ₹6.88 crore from PayU's settlements towards IRF claims, after reversing over ₹5.95 crore. PayU also faced potential deductions from other acquiring banks amounting to over ₹41 crore in pending claims.
PayU's Arguments: No Role in MCC Assignment
PayU contended that its role is limited to forwarding merchant business details to acquiring banks, which then assign the appropriate MCC. It argued that it cannot be held liable for any shortfall in interchange fees due to misclassification. The company also challenged 's private , arguing that such disputes must be resolved under , which mandates a statutory panel for dispute resolution. PayU sought the return of the withheld ₹6.88 crore and against further deductions.
's Defense: Private Process, No Direct Role
countered that its is based on voluntary submissions by acquiring banks and issuer banks, and that it has no direct role in the deductions made by banks. argued that any recovery from PayU depends on the bilateral agreements between PayU and the acquiring banks, to which is not a party. Senior counsel for submitted that the company does not debit PayU's settlement accounts or issue settlement instructions.
Court's Solution: RBI as Mediator
Rather than sending the parties for under , the court invoked its to refer the matter to the RBI. Justice Prasad noted that the entire payment system operates under RBI's authorization and supervision, making the central bank the most competent authority to address systemic issues. The court clarified that the RBI would act only as a facilitator and not as a dispute resolution body under Section 24 of the PSS Act.
"This Court makes it clear that the matter is being referred to RBI only as an effort to find out a solution regarding creation and allocation of wrong MCCs and as to how the past transactions can be settled and to make sure that the transactions between the parties go smoothly under the system operated by Defendant No.6 till the of disputes either by this Court or by any other forum."
The court emphasized that adopting this process would ensure that future transactions are not hampered pending mediation.
Ordered to Protect PayU
During the 30-day mediation period, the court ordered: - shall not issue any final IRF determination in respect of pending claims. - Acquiring banks ( and others) shall not make further deductions from PayU's settlements. - Issuing banks shall not raise new IRF claims related to past transactions. - All parties must maintain on existing claims.
The court made it clear that this order does not affect transactions in the ordinary course and leaves all legal rights and contentions open. The case is listed for , for further hearing.
