How far should courts scrutinise pricing decisions in public payment systems? Discuss with recent examples.

A pricing decision in a public payment system is a choice about who pays to run it. One example is the Merchant Discount Rate (MDR), the fee a merchant pays to accept a digital payment. Such decisions are economic policy. But UPI now reaches almost everyone, so it works like a public utility. The current Supreme Court challenge to the 0.4% MDR on Person-to-Merchant (P2M) UPI payments [1] shows that courts should review these decisions properly but with deference.

Why courts should scrutinise

• Public character: UPI handled about 241.62 billion transactions worth about ₹314 lakh crore in FY 2025-26 [1]. Its pricing affects livelihoods protected by Article 19(1)(g), and it must not be arbitrary under Article 14.
• Legal basis: Is MDR a commercial fee, a tax or a levy? The answer decides whether Parliament must authorise it, and that is a question of law for courts.
• Proportionality: In IAMAI v RBI (2020), the SC accepted that RBI has wide powers but struck down its crypto-banking circular as disproportionate. It held that having a power is different from how it is used [4].
• Inclusion: Small merchants were deliberately protected under the earlier regime, with zero MDR plus a 0.15% incentive on payments up to ₹2,000 [2]. Courts can check that a reversal does not leave vulnerable users behind.

Why courts should hold back

• Technical expertise: Pricing involves trade-offs between cost, fraud control and system resilience. With about 791 million transactions a day, NPCI says growth demands more investment in security and capacity [1].
• Fiscal sustainability: NPCI told the SC that zero MDR is "no longer sustainable" and would shift costs onto the public exchequer [1]. The earlier incentive scheme alone needed a ₹1,500 crore outlay [2].
• Narrow impact: The fee applies only to P2M payments above ₹2,000. P2P transfers stay free and about 96% of merchant transactions are unaffected [3]. Courts should not replace this with their own idea of a "fair price".

How far: a graded standard

• Legality (is there authority?) → Rationality (is it backed by data?) → Proportionality (is it the least restrictive option?) → if all three are met, defer to the executive.

So courts should test the legality, rationality and proportionality of payment pricing, not its wisdom. Review that is rigorous but deferential, supported by open cost disclosure from NPCI and RBI, can keep India's Digital Public Infrastructure financially sustainable and keep small merchants included. That fits Article 14's guarantee against arbitrary action and SDG 8.10, which aims to widen access to financial services.