The Supreme Court on Monday issued notices to the Centre, the Reserve Bank of India (RBI) and others on a PIL challenging the decision to levy a Merchant Discount Rate (MDR) on specified UPI person-to-merchant transactions exceeding Rs 2,000 from October 15.A Bench headed by Chief Justice of India Surya Kant, however, declined to stay the Centre’s decision to impose MDR on such UPI transactions.Observing that the issue appeared to be more technical than legal in nature, the top court asked the Centre, RBI and others to respond within four weeks to the petition filed by advocate Anjan Datta.Appearing for the Centre, Additional Solicitor General N Venkataraman submitted that the charges would come into effect only from October 15 and that 96 per cent of UPI transactions would remain exempt. He said the government would not receive any part of the MDR and that it was a settlement fee between payment aggregators and banks. As the ASG submitted that “It’s neither a tax nor a fee”, the Bench said, “We need these facts on affidavit”.Alleging that the MDR on specified UPI transactions was introduced without adequate statutory safeguards, transparency or public consultation, the PIL challenged the Centre’s September 14 notification.“Despite official assertions that merchants cannot pass these costs to consumers, the fee on qualifying receipts will inevitably enter price structures, reduce working capital or induce refusal of UPI payments and transaction-splitting among low-margin traders,” Datta contended.“A bare direction against an expressly recognised economic consequence does not eliminate the burden,” he submitted.The PIL has made the Centre, RBI, National Payments Corporation of India (NPCI) and the UPI & Services Steering Committee respondents in the case.While UPI payments above Rs 2,000 have been exposed to levies, identical “no-charge” protection continues to be extended to RuPay-powered debit cards without any monetary ceiling, Datta pointed out.Clarifying that he was not against maintaining a secure payment infrastructure, Datta submitted that he was against the creation of a nationwide compulsory payment burden without disclosing cost studies, underlying methodology, or enforceable anti-pass-through safeguards.The PIL contended that thresholds like the Rs. 2,000 transaction mark and Rs.1 lakh monthly receipt ceiling were not supported by disclosed data. A transaction of Rs. 2,001 attracts a percentage fee while Rs 2,000 does not, creating financial “cliffs” that distort market behaviour and discriminate between similarly situated merchants while favouring very high-value transactions via the cap, the petitioner submitted.Terming the multi-tiered levy as manifestly arbitrary and violative of Articles 14 (right to equality) and 19(1)(g) (right to practise any profession, occupation, trade, or business) of the Constitution, the PIL submitted that fixing financial charges via press releases rather than notified statutory rules suffered from excessive delegation of essential fiscal functions to an unincorporated steering committee.