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UPI Transaction Fee Over ₹2,000 Challenged in Supreme Court by
A has been filed before the challenging the ’s decision to permit the levy of a on specified Unified Payments Interface (UPI) person-to-merchant transactions exceeding ₹2,000. The petition, registered as Anjan Datta v. Union of India & Ors. (Diary No. 57387/2026), contends that the framework imposing the fee is , , and lacks adequate statutory safeguards or transparent consultation. The case is expected to be listed for preliminary hearing before the , effective date.
Background of the MDR Framework
On , the issued a notification under , followed by a detailed MDR framework announced on September 15 by the . Under the new regime, scheduled to take effect from October 15, a 0.4% MDR will apply to person-to-merchant (P2M) UPI transactions exceeding ₹2,000. The charge is capped at ₹300 for transactions of ₹75,000 or more. Person-to-person transfers and merchant payments up to ₹2,000 remain free.
Certain essential and thin-margin sectors—including railways, telecommunications, insurance, fuel, and agricultural inputs—have been placed under a separate flat ₹5 MDR regime for transactions above ₹2,000. Capital-market transactions attract an MDR of 0.02%, also capped at ₹300. Small merchants receiving up to ₹1 lakh per month through eligible UPI QR transactions are exempt from the charge entirely.
The framework represents a shift from the earlier zero-MDR regime for UPI, which had been in place since the platform’s launch. While the government and NPCI have maintained that the charge is imposed only on the merchant-acquiring side and should not be passed on to consumers, the petitioner argues that the economic burden will inevitably ripple through the payment ecosystem.
Constitutional Challenge Under Articles 14 and 19(1)(g)
The petition’s core constitutional challenge rests on Articles 14 (equality before law) and 19(1)(g) (freedom to practise any profession, occupation, trade, or business). The petitioner argues that the framework creates an and multi-tiered fee structure, particularly because the ₹2,000 threshold results in substantially different treatment between a transaction of exactly ₹2,000 and one of ₹2,001. This “,” the plea contends, may encourage transaction splitting, discourage merchants from accepting UPI payments, or force them to absorb the cost—reducing working capital and harming business operations.
The differential treatment between UPI transactions and RuPay debit-card payments is also highlighted as constitutionally suspect. While UPI payments above ₹2,000 attract MDR, RuPay debit cards continue to enjoy zero MDR without any monetary ceiling. “The notification continues the no-charge protection for RuPay debit cards without a monetary ceiling,” the plea states, arguing that this distinction violates . The petitioner further invokes by asserting that MDR directly affects merchants’ receipts and could impair their ability to carry on trade.
Challenge to Section 10A and Procedural Irregularities
The PIL also challenges the of the amended , alleging that the provision gives unguided powers to the executive to decide which electronic payment modes receive the no-charge protection. The petition argues that the statute does not itself lay down sufficient standards for determining MDR rates, thresholds, or classifications.
On the procedural front, the petitioner questions the manner in which the rates and classifications were introduced. The September 14 notification does not prescribe the specific MDR rates, formula, caps, or detailed mechanism; instead, the detailed framework was announced through a press release. “The complete operative instrument prescribing these charges has not been published in the Official Gazette,” the plea asserts. The petition seeks disclosure of the complete official record, including the empirical data and methodology used to determine the ₹2,000 transaction threshold, the ₹1 lakh monthly merchant-receipt threshold, and the sectoral classifications.
The petitioner further contends that the government has not conducted wider or transparent consultations with stakeholders, nor has it published any impact assessment. “A bare direction against an expressly recognised economic consequence does not eliminate the burden,” the plea argues, noting that merchants may either absorb the fee, reduce working capital, or refuse qualifying payments despite official assurances that costs will not be passed to consumers.
Relief Sought and Potential Impact
The primary relief sought is the quashing or suspension of the notification and MDR framework insofar as they impose charges on UPI merchant transactions above ₹2,000. Alternatively, the petitioner seeks a reconsideration of the framework after transparent consultation, publication of empirical data and an impact assessment, and the creation of enforceable safeguards for micro and small enterprises. The plea also calls for an independent review by the and the .
The case has significant implications for India’s digital payments landscape. UPI has become the dominant mode of retail payments, with millions of small merchants relying on it for daily transactions. The imposition of MDR, even on larger transactions, could alter merchant behaviour—potentially driving some to split transactions or revert to cash. Legal professionals will closely watch whether the Supreme Court grants before the October 15 deadline, and how it interprets the executive’s power to impose financial burdens under .
The petition also raises broader questions about the balance between promoting digital payments and protecting small businesses. If the court finds the framework under , it may set a precedent requiring the government to provide clearer legislative standards and empirical justifications for differential treatment of payment systems. The challenge to Section 10A could also prompt a re-examination of the delegation of legislative power in the financial technology sector.
As the matter awaits listing, stakeholders—including payment service providers, merchant associations, and consumer groups—are likely to file interventions. The outcome of this PIL will be closely watched not only for its immediate impact on UPI charges but also for its potential to shape the regulatory architecture of digital payments in India.
