New Delhi | The Supreme Court on Monday declined to grant interim relief against the Centre’s new Merchant Discount Rate (MDR) framework for certain UPI transactions above Rs 2,000, but sought a detailed response from the government on the issue.

A bench headed by Chief Justice of India Surya Kant and comprising Justices Joymalya Bagchi and Vipul M Pancholi issued notice to the Centre while hearing a PIL challenging the proposed charges.

The petition, filed by advocate Anjan Datta, challenges the Centre’s September 14-15 notifications providing for a 0.4 per cent MDR on specified merchant UPI payments above Rs 2,000. The new framework is scheduled to come into effect from October 15.

The petitioner has sought quashing of the notifications, arguing that imposing charges on such transactions could discourage the use of digital payments. The counsel also submitted that UPI has played a role in curbing black money and promoting digital transactions.

The Centre defended the framework before the court. Additional Solicitor General N Venkataraman told the bench that the new mechanism would take effect from October 15 and that 96 per cent of gateway users would remain exempt.

He further submitted that essential services would face a cap of Rs 5 and that an overall value cap would also apply. According to the Centre, the MDR is neither a tax nor a fee but an industry-level settlement mechanism.

After hearing the submissions, CJI Kant said the technical aspects of the framework should be placed before the court through an affidavit. Justice Bagchi also raised questions about the legal basis and executive authority for imposing the charge, particularly given its potential impact on a large section of UPI users.

The court’s order means the proposed framework will remain in place for now, with the Centre required to respond to the PIL through a detailed affidavit.