A major development has emerged for UPI users. The Supreme Court has refused, for now, to stay the proposed decision to impose a Merchant Discount Rate (MDR) on certain merchant UPI payments above ₹2,000.

However, the matter is not over. The Supreme Court has issued notices to the Central government, RBI and NPCI, seeking their responses to the petition challenging the proposed arrangement.

Under the proposed system, MDR is to be imposed on eligible Person-to-Merchant (P2M) transactions above ₹2,000. The arrangement is stated to be scheduled to come into effect from October 15.

But the key point is that this does not mean every customer making a UPI payment above ₹2,000 will automatically have to pay a separate charge. The fee is primarily linked to the merchant-side transaction.

At the same time, merchant UPI payments of up to ₹2,000 and Person-to-Person (P2P) UPI transactions, involving payments from one individual to another, have been kept outside this arrangement.

The focus is now on the Supreme Court’s next hearing. The court will also examine the legal challenge to the proposed MDR arrangement.

In other words, UPI has not been discontinued, nor has a decision been made to directly deduct money from customers for every payment above ₹2,000. However, a legal battle has begun over an important proposed change in UPI payment rules.