A Public Interest Litigation (PIL) has been filed before the Supreme Court challenging the Centre’s decision to permit the levy of Merchant Discount Rate (MDR) on specified Unified Payments Interface (UPI) transactions above ₹2,000.
The petition has been filed by Advocate Anjan Datta in Anjan Datta v. Union of India & Ors., challenging the September 14, 2026 Gazette notification as well as the MDR framework announced subsequently by the Ministry of Finance. The matter is registered as W.P.(C) Diary No. 57387/2026.
Under the new framework, which is scheduled to come into effect from October 15, 2026, a 0.4% MDR will apply to specified person-to-merchant (P2M) UPI transactions exceeding ₹2,000. The charge will be capped at ₹300 for transactions of ₹75,000 or more. Person-to-person (P2P) transactions will continue to remain free.
Certain essential and specified 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 have also been assigned a lower rate under the framework. Small merchants receiving up to ₹1 lakh per month through eligible UPI QR transactions are proposed to remain outside the MDR regime.
The petitioner has argued that the framework creates an arbitrary and multi-tiered fee structure, particularly because the ₹2,000 threshold results in substantially different treatment between transactions of ₹2,000 and ₹2,001.
The plea also questions the ₹1 lakh monthly receipt threshold for small merchants and argues that the government has not disclosed sufficient empirical data or a clear methodology to justify these classifications.
According to the petition, the distinction between UPI transactions and RuPay debit-card transactions is also constitutionally suspect. While UPI transactions are protected from charges only up to ₹2,000, the no-charge protection for RuPay debit-card transactions continues without a similar monetary ceiling. The petitioner argues that this differential treatment violates Article 14 of the Constitution.
The petition further invokes Article 19(1)(g), contending that MDR directly affects merchants' receipts and could have an impact on their business operations.
The PIL also raises a legal challenge to the manner in which the MDR rates and classifications have been introduced.
The petitioner contends that the September 14 notification does not itself prescribe the specific MDR rates, formula, caps or detailed mechanism for determining the charges, while the subsequent framework contains detailed rates and classifications.
The plea questions whether such financial obligations can be introduced through notifications, press releases and related directions without adequate statutory standards and safeguards. It seeks disclosure of the complete official record, including the material relied upon for determining the rates and the role of the UPI & Services Steering Committee.
The petitioner has sought quashing of the notification and the MDR framework insofar as it permits charges on UPI merchant transactions above ₹2,000.
Alternatively, the plea seeks a fresh consultation and review based on empirical data and impact assessment, along with greater transparency regarding the methodology used to determine the charges.
The petition also challenges the constitutional validity of the amended Section 10A of the Payment and Settlement Systems Act, 2007, contending that the provision does not itself lay down sufficient standards for determining MDR rates and related classifications.
The challenge comes shortly after the Centre and NPCI announced the new MDR regime, under which UPI payments by consumers are intended to remain free while charges are imposed within the merchant-payment ecosystem.
Case: Anjan Datta v. Union of India & Ors.
Diary No.: 57387/2026
Issue: Challenge to MDR on specified UPI merchant transactions above ₹2,000.
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