Supreme Court Petition Challenges 0.4% UPI Charge for Big Transactions
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims + Mains·
Regulatory transparency and MDR structures in digital public infrastructure: a GS3 Economy and Ethics case study.
Why in news
Advocate Anjan Datta filed a petition in the Supreme Court challenging the government's decision to impose a 0.4% charge on merchants for UPI transactions exceeding ₹2,000 starting October 15.
Background
The petition challenges the amended Section 10A of the Payment and Settlement Systems Act, 2007. The petitioner alleges a lack of transparency as MDR rates and thresholds were set via press releases instead of gazette notifications.
Facts for Prelims
- Act / BillPayment and Settlement Systems Act, 2007
- Fact0.4% charge imposed on merchants for UPI transactions over ₹2,000
- FactCharge implementation date: October 15
- BodySupreme Court of India
Prelims practice question
With reference to the UPI transaction charges, consider the following statements:
- The charges are governed under the Payment and Settlement Systems Act, 1997.
- A 0.4% charge is imposed on merchants for UPI transactions exceeding ₹2,000.
- The charge implementation date is set for 15 October.
Which of the statements given above is/are correct?
- (a)3 only
- (b)1 and 3 only
- (c)2 and 3 only
- (d)1, 2 and 3
Show answer
Answer: (c) 2 and 3 only — Statements 2 and 3 are correct. Statement 1 is incorrect: The note specifies the Payment and Settlement Systems Act, 2007.
For Mains
Q. Critically examine the constitutional and economic implications of implementing Merchant Discount Rate (MDR) structures on digital payment systems like UPI.
Dimensions to cover in your answer
- Procedural lapse: Use of press releases instead of gazette notifications for regulatory changes
- Small business impact: Potential erosion of profit margins for micro-merchants due to transaction costs
- Transparency deficit: Lack of public consultation in determining MDR thresholds and rates
Keywords: Merchant Discount Rate · Digital Public Infrastructure · Constitutional Validity · Regulatory Transparency · Payment Systems
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