The Supreme Court on Monday declined to grant an interim stay on the new 0.4 percent merchant discount rate for specified UPI transactions above Rs 2,000. The charge takes effect on October 15.

A bench led by Chief Justice Surya Kant, with Justices Joymalya Bagchi and V. Mohana, issued notices to the Centre, the Reserve Bank of India and the National Payments Corporation of India. They must reply within four weeks, and the next hearing is on October 13.

The petition, filed by advocate Anjan Datta, challenges the September 14 gazette notification under Section 10A of the Payment and Settlement Systems Act, 2007. It argues the levy amounts to a tax imposed without parliamentary approval.

The court pressed the petitioner’s lawyer on the legal character of the charge. “If it is not a tax or fee, what is the executive scope of making this expropriation?” the bench asked.

Peer-to-peer transfers remain free, and the government says 96 percent of gateway transactions are unaffected. Merchants processing large UPI payments are watching the October 13 hearing closely.