The Supreme Court on September 28 declined to pause India’s new merchant-discount framework for some Unified Payments Interface transactions. A three-judge bench led by Chief Justice Surya Kant issued notices to the Union government, the Reserve Bank of India, the National Payments Corporation of India and other respondents on a petition challenging the measure.
The framework announced on September 15 is scheduled to take effect on October 15. It sets a 0.4% merchant discount rate on specified person-to-merchant UPI payments above ₹2,000, while person-to-person transfers and qualifying small-merchant payments remain exempt. The charge is capped at ₹300 for transactions above ₹75,000; listed essential-service categories including railways, fuel, insurance and utilities carry a flat ₹5 rate.
The Union government told the court that the charge is borne within the merchant-payment system and cannot be passed directly to customers. It also said 96% of users would be outside the charge. Those are the government’s explanations of the policy; the petition disputes the framework’s legal basis, transparency and effect on merchants and digital-payment access.
The bench did not decide whether the policy is lawful. Refusing an interim stay leaves the October 15 implementation schedule in place for now, while the court has asked the respondents to file replies within four weeks. Describing the hearing as a final approval would therefore overstate what the court decided.