The Supreme Court has currently refused to impose an immediate stay on the imposition of charges on select merchant payments made through UPI. However, in this matter, the Supreme Court has issued notice to the concerned parties including the Central Government, UPI Steering Committee, NPCI. Reply has been sought from everyone within four weeks. The case is being heard by a bench headed by CJI Justice Surya Kant. The petition challenges the legality of the new merchant fee implemented on select merchant payments of more than Rs 2,000.
The bench of CJI Justice Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana was hearing a writ petition filed by lawyer Anjan Dutta today. During this, Additional Solicitor General (ASG) N. appeared on behalf of the Central Government. Venkataraman said that these charges will be applicable from October 15. He said that this charge will not be levied on 96% of transactions and the charge limit for essential services has been fixed at ₹5.
ASG N. Venkataraman said that this is neither a tax nor a fee. On this, CJI Surya Kant said, 'We want these facts on the affidavit… This is mostly a technical matter.' Justice Bagchi asked, 'Is this a tax or a fee? If there is no fee, what is the administrative basis for this collection? What service is being provided in this?
ASG N. Venkataraman clearly said, 'This is not extortion.' He further said that the Government of India is not taking even a single rupee from these charges, and this is a settlement fee between payment aggregators and banks. The ASG explained that banks incur costs when they conduct electronic transactions, and there are charges on credit/debit card transactions, whereas UPI payments were exempted from those charges. However, these charges are necessary to keep the entire system functioning properly.
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It is noteworthy that NPCI has decided to implement the system of charge i.e. MDR on selected merchant payments through UPI from October 15. A charge of 0.4 percent has been fixed on payments above Rs 2,000. Its maximum limit has been kept at Rs 300 for payment of Rs 75,000 or more. However, no charge has been imposed on UPI payments made between common people. The government claims that about 96 percent of merchant transactions will not be affected by this change.
In the new system, there is a provision for exemption from charges for small shopkeepers also. Small merchants receiving up to Rs 1 lakh every month through UPI QR will not have to pay any charges. A fixed charge of Rs 5 has been fixed on transactions above Rs 2,000 in sectors like railways, telecom, insurance, fuel and agricultural inputs.
The PIL, which reached the Supreme Court, alleges that the decision to impose charges on UPI merchant payments of more than Rs 2,000 was taken without adequate legal protection, transparency and public consultation. The petition has challenged the decision of the Center under which changes were made in the zero-duty system implemented from January 2020. Now the Supreme Court has refused to impose an immediate stay and has sought answers from the parties concerned. This means that at present there is no interim stay from the court on the new system which will be implemented from October 15.
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