Merchants were never assured of zero MDR on UPI indefinitely: Govt to Supreme Court

Learn the stated distinction and keep the two meanings separate. The Centre on Thursday defended the proposed Merchant Discount Rate (MDR) charges on Unified Payments Interface (UPI) transactions above ₹2,000, telling the Supreme Court that merchants were never assured that UPI payments would remain free indefinitely. It said the ₹2,000 threshold was introduced to protect ordinary retail transactions and small merchants, while allowing higher-value transactions involving merchants considered better placed to bear a modest charge to attract MDR.

Check the reported status and any stated limitations; do not assume an outcome beyond the source.

Use the stated distinction to avoid mixing up different meanings. Why the Centre says the ₹2,000 threshold is justifiedDefending the classification of transactions based on their value, payment mode and merchant category, the Centre said the framework meets the constitutional test of “intelligible differentia” under Article 14 and has a “rational nexus” with the objectives of financial inclusion, affordability and the long-term sustainability of the digital payments ecosystem. The government said its role was limited to determining which electronic payment modes would remain exempt from charges under Section 10A of the Payment and Settlement Systems Act, 2007.

• The Centre said it had disbursed ₹8,730 crore in incentives to acquiring banks between 2021-22 and 2024-25 to support zero-MDR transactions. • Person-to-merchant (P2M) transactions of up to ₹2,000 would also attract zero MDR. • Additionally, transactions involving small merchants receiving up to ₹1 lakh a month through UPI QR codes would remain exempt from the proposed charges.