Overview
The Supreme Court on 28 September 2026 declined a petition seeking an interim stay on the government’s decision to levy a 0.4% MDR for specified UPI P2M transactions exceeding ₹2,000. The bench, headed by Chief Justice of India Surya Kant, issued notice to the Union and asked for counter‑affidavits within four weeks.
Key Developments
- The government’s notification dated 14 September 2026 amended Section 10A of the Payment and Settlement Systems Act, 2007 to introduce the MDR.
- NPCI began applying the MDR from 15 October 2026.
- For transactions of ₹75,000 or more, the MDR is capped at ₹300 per transaction.
- The petition, filed by advocate Anjan Datta, argues that the amendment gives the Executive unchecked power to decide which electronic modes lose the no‑charge protection, while RuPay debit cards remain exempt.
Important Facts
The court questioned the nature of the MDR, with Justice Joymalya Bagchi asking Additional Solicitor General N. Venkataraman whether the charge is a tax or a fee. The government clarified that it is neither, but a levy to offset costs of the payment ecosystem.
Exam Relevance
This case touches upon several UPSC topics:
- Financial inclusion and digital payments – Understanding how policy changes affect transaction costs for merchants and consumers.
- Constitutional law – The challenge raises questions about the limits of executive power under the Constitution (GS2).
- Regulatory framework – Section 10A amendment illustrates how legislation evolves to regulate emerging payment systems (GS3).
- Role of institutions – The interaction between the Supreme Court, the Union Government, and bodies like NPCI showcases institutional checks and balances.
Way Forward
The Union must submit detailed counter‑affidavits addressing the court’s concerns about the MDR’s nature and its constitutional validity. Meanwhile, merchants should prepare for the additional cost, especially for high‑value sales where the cap of ₹300 applies. UPSC aspirants should monitor the final judgment, as it will set a precedent for future regulatory interventions in the digital payments space and clarify the scope of executive authority under the Act.