The National Payments Corporation of India (NPCI) has informed the Supreme Court that merchants cannot pass on Merchant Discount Rate (MDR) charges to customers under the revised Unified Payments Interface (UPI) pricing framework.

In an affidavit filed on November 3, NPCI clarified that UPI application providers cannot impose platform fees or additional charges on users for making payments through UPI. The submission came in response to a petition challenging the revised MDR framework introduced in September.

The Supreme Court had sought responses from the Centre, NPCI and other stakeholders on September 28 regarding the petition, which challenged the decision to introduce MDR on certain person-to-merchant (P2M) UPI transactions exceeding Rs 2,000.

The petition has challenged amendments to Section 10A of the Payment and Settlement Systems Act, 2007, introduced through the Taxation and Other Laws (Amendment) Act, 2026. It has also questioned the subsequent Finance Ministry notification and NPCI's revised MDR framework.

According to NPCI, the MDR charge applies to only a small proportion of UPI transactions. In its affidavit, the organisation stated that approximately 0.4 per cent of P2M transactions exceed the Rs 2,000 threshold and attract the charge.

NPCI argued that the limited scope of the levy leaves little room for merchants to revise prices across their entire customer base.

It maintained that since the charge applies only to occasional transactions above a specified value, its impact on general consumer pricing should remain limited.

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The clarification is significant as UPI continues to be a widely used digital payment system in India. The Supreme Court's examination of the petition could have implications for merchants, payment service providers and the future pricing structure of high-value UPI transactions.