The Supreme Court will take up on Monday a PIL challenging the Centre’s decision to impose a Merchant Discount Rate (MDR) on specified UPI person-to-merchant transactions of over Rs 2,000.Also read: New UPI regime from Oct 15: Nominal fee on large merchant transactions, person-to-person transactions to remain freeThe PIL filed by advocate Anjan Datta is listed for hearing before a Bench led by Chief Justice of India Surya Kant on September 28.Ending nearly six years of fully free UPI payments, the Centre has introduced a 0.4 per cent merchant discount rate (MDR) on UPI payments of more than Rs 2,000 to be levied on P2M transactions of above Rs 2,000. However, no MDR will be levied on UPI transactions of up to Rs 2,000.The 0.4 percent MDR on general person-to-merchant (P2M) UPI transactions exceeding Rs 2,000 is subject to a cap of Rs 300 for transactions of Rs 75,000 and above. Specified essential sectors attract a flat Rs. 5 charge, capital-market payments carry a 0.02% levy and merchants receiving up to Rs. 1 lakh per month remain exempt.The government claimed that almost 96% of merchant transactions will remain unaffected as they either fell below Rs 2,000 or were covered by zero-MDR provisions for small merchants receiving up to Rs 1 lakh per month through UPI QR codes.However, alleging the levy was introduced without adequate statutory safeguards, transparency or public consultation, the PIL challenged the Centre’s September 14 notification issued by the Union Ministry of Finance and the MDR framework announced on September 15, which is to come into effect from October 15.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, the RBI, the 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 practice 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.