Supreme Court Declines to Halt New Fee on UPI Transactions Over Rs 2,000

The Supreme Court of India on Monday declined to grant a stay on the recent decision by the Union government to impose a fee on Unified Payments Interface (UPI) transactions exceeding Rs 2,000. This decision has sparked widespread discussion among businesses and consumers alike, as the move may affect transaction costs across the digital payment landscape.

The court’s decision came after it requested a response from the government regarding a petition that challenges the imposition of this fee. On September 14 and 15, the Ministry of Finance had issued notifications revealing that UPI payments made to merchants for amounts over Rs 2,000 would incur a merchant discount rate (MDR) of 0.4%. This fee, charged to merchants by banks, is meant to cover transaction processing costs.

In the realm of digital payments, merchant discount rates vary widely, typically ranging from 1% to 3% for credit card transactions and potentially up to 0.9% for debit cards. The petitioner in this case argued that the additional costs associated with these UPI charges could ultimately be passed on to consumers, thereby increasing the financial burden on everyday users.

During the proceedings, Additional Solicitor General N. Venkataraman, representing the Union government, informed the court that approximately 96% of UPI transactions would remain unaffected by this fee. He emphasized that the charges are set to take effect from October 15, asserting that the levy is neither a tax nor a fee but rather a necessary measure for the sustainability of digital payment systems. Chief Justice Surya Kant remarked that the complexities surrounding the issue necessitate a detailed affidavit from the government, noting that it is a technical matter requiring thorough examination.

The introduction of this fee on UPI transactions comes as India continues to strengthen its digital payment infrastructure, aiming for a more inclusive economy. However, it also raises pertinent questions about the balance between operational sustainability for merchants and the affordability of services for consumers. As the landscape of digital payments evolves, stakeholders will be closely monitoring how this fee impacts transactions and consumer behaviour in the coming months.

Source: scroll.in