Editorial

The Supreme Court’s refusal to stay the Centre’s decision to impose a 0.4% Merchant Discount Rate on person-to-merchant UPI transactions above ₹2,000 is a pragmatic, if imperfect, ruling. By declining interim relief while seeking detailed responses from the government and the Reserve Bank of India within four weeks, the Court has signalled that digital payments cannot remain permanently insulated from economic realities, yet it has also kept the door open for scrutiny.

UPI has been one of India’s quiet triumphs. It transformed everyday transactions, reduced cash dependence, and brought millions into the formal economy. Zero-MDR for most users was a deliberate policy choice that accelerated adoption. But zero is not a sustainable equilibrium forever. Banks and payment service providers have long argued that the infrastructure, cybersecurity, settlement systems and fraud management come at a real cost. When volumes soar into the billions of transactions, those costs do not magically disappear. The government’s decision to charge only on higher-value merchant payments, while exempting the vast majority of smaller ones, is an attempt to strike a balance between accessibility and viability.

Critics are right to worry. Even a modest charge can alter behaviour at the margins. Small traders may hesitate, informal sellers may retreat to cash, and the frictionless experience that made UPI revolutionary could begin to fray. There is also a legitimate question of transparency: if this is neither a tax nor a conventional fee, what exactly is it, and who ultimately bears the burden? The Court’s demand for explanations from the Centre and RBI is therefore essential. Policy that touches the daily lives of hundreds of millions cannot rest on assertion alone.

Yet the alternative of perpetual free rides is equally unrealistic. Digital public infrastructure requires continuous investment. If the system is to remain reliable, secure and innovative, someone must fund it. A carefully calibrated MDR on larger transactions is preferable to sudden, across-the-board fees or the gradual degradation of service quality. The October 15 start date gives stakeholders time to prepare, and the exemption for most everyday payments softens the immediate impact.

The real test will come in the weeks ahead. The government’s response must demonstrate that the charge is proportionate, that the revenue will strengthen the ecosystem rather than merely plug balance sheets, and that safeguards exist for genuine small merchants. The Court has wisely refused to freeze the policy in place. It has also refused to give it a blank cheque. That is the correct institutional posture: allow implementation while insisting on accountability. India’s digital payments success was built on bold policy. Sustaining it will require equally careful calibration.

The confirmation of Israeli Prime Minister Benjamin Netanyahu’s secret weekend visit to Abu Dhabi, where he met UAE President Mohamed bin Zayed Al Nahyan, is a reminder that Middle Eastern diplomacy often advances in the shadows even as public rhetoric remains fierce. The hour-long meeting, focused on bilateral ties and broader regional concerns, underscores the durability of the Abraham Accords framework even amid ongoing conflicts and shifting alliances.

Secrecy was deliberate. In a region where every public handshake is scrutinised for political cost, discreet engagement allows leaders to test ideas, manage expectations, and avoid domestic backlash. For the UAE, hosting Netanyahu carries risks given Arab public opinion on Gaza and wider Israeli policies. For Netanyahu, the trip signals that key Gulf partners remain willing to engage despite the war’s human and political toll. Both sides appear to have calculated that strategic interests—security coordination, economic ties, and shared concerns over Iran—still outweigh the optics of distance.

The Abraham Accords were never purely symbolic. They created channels for intelligence sharing, trade, technology cooperation, and quiet security alignment. This meeting suggests those channels remain open. Discussions likely touched on the Iran challenge, the residual threat from non-state actors, and the need to stabilise a region battered by prolonged conflict. Whether they produced concrete outcomes is secondary; the very fact of the meeting reaffirms that pragmatic interests can still cut through ideological noise.

Yet secrecy has limits. When such visits surface—as this one did through Israeli media and subsequent confirmation—they invite questions about transparency and consistency. Gulf states have publicly criticised aspects of Israel’s military campaign while privately maintaining working relationships. Israel continues to seek regional legitimacy even as its actions in Gaza strain that legitimacy. The gap between private diplomacy and public posture risks breeding cynicism on all sides. Still, quiet engagement is preferable to isolation. In a region where open warfare and proxy conflicts dominate headlines, any sustained dialogue between Israel and influential Arab states is valuable. The UAE has positioned itself as a pragmatic actor seeking stability and economic diversification. Netanyahu, for his part, continues to prioritise alliances that can constrain Iran and expand Israel’s strategic depth.

The true measure of this visit will not be the secrecy that surrounded it, but whether it produces tangible steps toward de-escalation, economic cooperation, or coordinated pressure on shared threats. Diplomacy conducted in the dark can still illuminate a path forward—if the parties choose to walk it.

• SAS Kirmani