The Supreme Court has declined to grant an interim stay on the Centre’s decision to introduce a 0.4% Merchant Discount Rate on specified UPI person-to-merchant transactions above Rs 2,000, while asking the government to explain the legal basis of the charge. A three-judge bench led by Chief Justice of India Surya Kant heard the public interest petition filed by advocate Anjan Datta on September 28.

The court issued notices to the Centre, the Reserve Bank of India and the National Payments Corporation of India, directing them to file counter-affidavits within four weeks. The matter is listed again on October 13, two days before the MDR framework takes effect on October 15. The refusal of a stay is not a ruling upholding the levy; the court only declined to halt the rollout at this stage.

Under the framework, eligible merchant payments above Rs 2,000 attract 0.4%, capped at Rs 300 for transactions of Rs 75,000 and above. Person-to-person transfers remain free regardless of amount, and essential services such as railways, telecom, insurance and fuel attract a flat Rs 5 per transaction. The government maintains that about 96% of merchant transactions will be unaffected.