NEW DELHI, September 29 — The Supreme Court on Tuesday declined to grant an interim stay on the Union Government's and NPCI's policy directive introducing a 0.4% Merchant Discount Rate (MDR) on merchant UPI transactions exceeding ₹2,000, scheduled to take effect on October 15, 2026.
A bench observed that digital payment pricing architecture and transaction settlement frameworks fall within the domain of fiscal and monetary policy, warranting no urgent judicial interdiction. The Ministry of Finance and the National Payments Corporation of India (NPCI) reaffirmed that person-to-person (P2P) transfers and small merchant peer-to-merchant (P2M) retail payments will remain completely free of charges.
Industry analysts noted that the targeted MDR framework provides banks and Payment Service Providers (PSPs) with a viable revenue framework to support heavy investments in server bandwidth, cybersecurity resilience, and fraud detection mechanisms.
Regulatory frameworks governing digital financial platforms and judicial reviews of economic policy are core topics in Indian polity and economy syllabi. Candidates should know that NPCI is an umbrella organisation for operating retail payments in India, established under the Payment and Settlement Systems Act, 2007.