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Business
Govt tells Supreme Court UPI zero‑MDR not permanent, exempts P2M up to ₹2,000
✍️ Hindustan Times
🗓 05 Nov 2026, 10:53 PM
👁 3
The central government told the Supreme Court that the promise of zero merchant discount rate on UPI transactions was never meant to be indefinite, and confirmed that person‑to‑merchant payments up to ₹2,000 will remain exempt from MDR.
The Union government appeared before the Supreme Court to clarify its position on the merchant discount rate (MDR) applicable to Unified Payments Interface (UPI) transactions. While earlier announcements had suggested a zero‑MDR regime for merchants, the centre asserted that such a guarantee was never intended to last indefinitely.
In its submission, the government highlighted that person‑to‑merchant (P2M) transactions valued at ₹2,000 or less will continue to enjoy an exemption from MDR. This carve‑out is aimed at protecting small merchants and encouraging low‑value digital payments.
Legal experts note that the clarification could influence ongoing litigation concerning the scope of the RBI’s MDR framework. The government’s stance also signals that any future changes to the zero‑MDR policy will be subject to regulatory review rather than being a permanent entitlement.
Stakeholders, including payment aggregators and merchant associations, are expected to monitor how the exemption is implemented, as it may affect pricing structures and the overall adoption of UPI for small‑ticket commerce.
In its submission, the government highlighted that person‑to‑merchant (P2M) transactions valued at ₹2,000 or less will continue to enjoy an exemption from MDR. This carve‑out is aimed at protecting small merchants and encouraging low‑value digital payments.
Legal experts note that the clarification could influence ongoing litigation concerning the scope of the RBI’s MDR framework. The government’s stance also signals that any future changes to the zero‑MDR policy will be subject to regulatory review rather than being a permanent entitlement.
Stakeholders, including payment aggregators and merchant associations, are expected to monitor how the exemption is implemented, as it may affect pricing structures and the overall adoption of UPI for small‑ticket commerce.