MDR Rollout Faces Uncertainty as NPCI Official Confirms No Decision Has Been Communicated

A public interest litigation has been filed in the Supreme Court questioning the constitutionality of amending Section 10A of the Payment and Settlement Systems Act, 2007, which would end the zero-MDR (Merchant Discount Rate) regime for high-value UPI transactions. The National Payments Corporation of India (NPCI) announced on September 14 that an MDR would be levied on UPI transactions exceeding ₹2,000, with the Finance Ministry detailing applicable rates effective October 15. The petitioner argues that this charge undermines the principles of transparency and equity in digital payments, invoking Article 14 of the Constitution.

The introduction of MDR for high-value UPI transactions could significantly impact consumers and businesses alike. For common citizens, particularly those who rely on digital payments for transactions, the new charges may increase the overall cost of using UPI, thereby influencing spending decisions. Market reactions could be mixed, with merchants possibly facing reduced transaction volumes due to the added costs, while payment service providers may experience varied impacts based on how they adapt to the new pricing mechanisms.

Looking ahead, the government’s next steps will depend on the Supreme Court’s forthcoming deliberations, scheduled for November 2. If the court finds the MDR amendment unconstitutional or queries its legal foundation, the government may have to halt its implementation. The outcome will not only define the future of this particular charge but also set precedents regarding regulatory authority in India’s digital payment landscape, underscoring the need for a clear framework governing such charges.

Source: The Hindu

(Expert Note: This report was independently prepared by the Wealthova Economy team.)