The Supreme Court of India has issued notices to both the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) regarding the implementation of a 0.4% Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions exceeding ₹2,000. This new regulation is set to take effect from October 15, 2026, and has raised significant concerns among stakeholders in the digital payments sector. Petitioners have voiced their apprehensions, arguing that such a fee could deter users from adopting digital payment methods, which are crucial for the financial ecosystem.
The introduction of this MDR framework comes amid broader updates from the RBI, which recently revised policies on bulk deposits and the realization of export proceeds, reducing the timeframe to nine months effective October 1. These changes are part of the RBI's ongoing efforts to standardize banking rules and improve the overall efficiency of financial transactions. However, the timing of the MDR implementation has sparked debate about its potential impact on the growth trajectory of digital payments in India.
- Concerns about digital payment growth — Petitioners argue that the MDR could hinder the adoption of UPI.
- Standardization efforts — The RBI aims to streamline banking rules with recent updates.
- Future hearings awaited — Stakeholders are keenly anticipating further court proceedings on this matter.
