A bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V Mohana is scheduled to hear the public interest litigation (PIL) filed by advocate Anjan Datta.
The plea challenges the Centre’s September 14 notification and the MDR framework announced on September 15. The new framework is scheduled to take effect from October 15.
What is changing for UPI payments?
Under the new framework, a 0.4 per cent MDR will apply to UPI payments of more than ₹2,000 made to merchants.
The charge will be capped at ₹300 for transactions of ₹75,000 and above.
However, person-to-person (P2P) UPI transfers will continue to remain free, irrespective of the transaction value. According to the plea, P2P transactions account for 37% of UPI transaction volume and 70% of its transaction value.
Certain sectors have also been given a separate MDR structure. Payments above ₹2,000 in sectors such as railways, telecom, insurance, fuel and agricultural inputs will attract a flat MDR of ₹5 per transaction.
For transactions involving mutual funds, securities, stockbrokers and dealers, the MDR has been set at 0.02%, subject to a cap of ₹300.
Why is the framework being challenged?
The petitioner has questioned the manner in which the MDR framework was introduced and alleged that it lacks adequate statutory safeguards, transparency and public consultation.
The plea also challenges the constitutional validity of the amended Section 10A of the Payment and Settlement Systems Act, 2007. It argues that the provision gives the executive broad powers to determine which electronic payment modes will receive protection from charges.
The petitioner has also raised the issue of different treatment of UPI and RuPay debit card transactions, pointing out that the no-charge protection for RuPay debit cards continues without a monetary ceiling.
What has the petitioner sought?
The PIL seeks quashing or suspension of the MDR framework to the extent that it imposes a charge on UPI transactions above ₹2,000.
Alternatively, it has sought reconsideration of the framework after transparent consultation, publication of relevant data and an impact assessment, along with safeguards for micro and small enterprises.
The petitioner has also sought that any future MDR classification take into account factors such as merchant turnover, MSME status, actual margins, geography and the ability of businesses to bear the cost.
The Centre and other parties, including the Reserve Bank of India, have been made respondents in the matter.
-With PTI inputs