Business & Economy
UPI Merchant Fees Face Supreme Court Test Monday
Large merchant payments face new charges just as legal review begins.
Large merchant payments face new charges just as legal review begins.
India’s system is entering a new pricing phase, but only for some larger merchant payments. The government and plan to charge merchants a fee on payments above ₹2,000 made from a , while keeping and smaller merchant payments free. Supporters say this will help pay for the network. Critics worry it could slow use or be passed on to shoppers.
The issue is now before the , which will hear a challenge to the policy. The central question is who should pay for digital payments as grows: banks and payment firms, merchants, or customers through higher prices. The answer matters because is now the main way many people pay, especially for small businesses and low-cost purchases.
A challenging the Centre’s decision to impose MDR on specified UPI merchant transactions reached the , with a hearing scheduled for Monday. The petition puts the legality and policy logic of ending the for large merchant payments before the court.
Reporting on the new rule focused on who would ultimately bear the MDR and whether merchants would absorb the cost, pass it on, or change checkout behavior. The central policy question became whether UPI could keep growing at scale if some merchants faced direct transaction costs for larger-ticket payments.
NPCI’s framework capped the at ₹300 for higher-value merchant payments of ₹75,000 and above. It also set a for payments to , defining the operational structure of the new pricing system.
The announced a 0.4% on UPI payments above ₹2,000, effective October 15. The charge applies to merchants, not consumers, while person-to-person UPI transfers and merchant payments up to ₹2,000 remain exempt.
India’s system had operated for years as a zero-fee network for most users, with person-to-person transfers staying free and subsidized through the existing framework. The later matters because it breaks that long-running model only for selected merchant transactions, not everyday consumer transfers.