UPI Charges Above INR 2,000: Plea Filed in Supreme Court Against New Merchant Fee Framework

A plea has been filed in the Supreme Court challenging the Centre's recent framework governing charges on commercial UPI transactions above ₹2,000, with Advocate Anjan Datta seeking quashing of the Finance Ministry's September 14 and 15 notifications. The plea has named the Union government, Reserve Bank of India (RBI), National Payments Corporation of India (NPCI) and UPI-related authorities as respondents.

The petition argues that the new charging framework could ultimately affect ordinary citizens, particularly if the additional cost imposed on merchants is passed on to consumers. The development comes as the government and NPCI have moved to introduce a structured Merchant Discount Rate (MDR) for certain higher-value merchant payments while keeping low-value UPI transactions free. UPI Payments New Rule Explained: What Happens to Payments Above INR 2,000 From October 15.

What the September 14 Gazette Notification Says

The Finance Ministry's Department of Financial Services issued a Gazette notification on September 14 under Section 10A of the Payment and Settlement Systems Act, 2007. The notification specifically covers RuPay-powered debit cards and UPI transactions of up to ₹2,000. It states that banks and system providers cannot impose a direct or indirect charge on a person making or receiving payments through the specified modes.

The notification, therefore, does not itself prescribe a charge for every UPI transaction above ₹2,000. Instead, it establishes the ₹2,000 threshold for the transactions that are expressly protected from such charges.

NPCI Sets Out MDR Framework for Higher-Value Merchant Payments

The latest NPCI framework provides further details on the treatment of UPI merchant transactions above ₹2,000. According to NPCI's September 15 FAQs, an MDR of up to 0.4% will apply to eligible merchant transactions above ₹2,000. The framework does not apply to person-to-person UPI transfers. The MDR for transactions of ₹75,000 or more is capped at ₹300.

The framework also provides exemptions or separate rates for certain categories and smaller merchants. Reports based on the NPCI framework said small merchants receiving up to ₹1 lakh a month through UPI QR codes would remain outside the MDR structure. New UPI Payment Charges 2026: What Will Remain Free and What Will Attract MDR?.

Plea Raises Concern Over Impact on Consumers

According to the plea filed by Advocate Anjan Datta, the new framework could have consequences beyond payment-system providers and merchants. The petitioner's contention is that any additional cost arising from commercial UPI transactions could eventually be reflected in prices paid by consumers. The plea has consequently challenged the notifications before the Supreme Court and sought their quashing.

The respondents named in the petition include the Union government, RBI and NPCI.

UPI Charges: What Changes for Users?

For ordinary users, the distinction between person-to-person and merchant payments is significant. Under the current framework, UPI transactions of up to ₹2,000 remain protected from charges by banks and system providers. Person-to-person payments are also not covered by the new MDR framework for commercial merchant payments. The new MDR structure is primarily aimed at eligible person-to-merchant transactions above the ₹2,000 threshold.

Government's Position on the New Framework

The changes are part of a broader effort to create a sustainable financial framework for India's UPI infrastructure as transaction volumes continue to expand. UPI processed 2,451 crore transactions worth about ₹29.9 lakh crore in August 2026, according to figures cited in the latest reporting on the framework.

The proposed MDR is intended to generate revenue within the payment ecosystem while maintaining zero charges for small-value transactions and person-to-person transfers.

Supreme Court Challenge Adds Legal Dimension

The fresh petition places the legality and potential consumer impact of the new UPI charging framework before the Supreme Court. As of now, the court's consideration of the challenge will determine whether the notifications and the resulting framework face any judicial intervention. The September 14 Gazette notification itself only expressly prohibits charges on UPI transactions up to ₹2,000; the detailed MDR provisions for eligible higher-value merchant payments have been set out separately through the subsequent framework.

(The above story first appeared on LatestLY on Sep 16, 2026 05:04 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).