Delhi HC Orders RBI To Mediate PayU’s ₹48 Crore Fee Dispute With Visa, Banks

PayU Payments is contesting interchange reimbursement fee (IRF) claims approaching ₹48 crore from Yes Bank and three other acquiring banks, and the Delhi High Court has now ordered the Reserve Bank of India to mediate. Justice Subramonium Prasad directed RBI to depute a senior officer familiar with the payments sector to attempt a resolution within 30 days. The matter is next listed for October 27.

The dispute centres on Merchant Category Codes, the four-digit tags that determine interchange fees owed by acquiring banks to issuing banks. ICICI Bank alleges some PayU merchants were assigned incorrect codes, resulting in underpaid fees. PayU counters that it only collects and verifies merchant information; assigning the MCC is the acquiring bank’s independent call. The order followed four consecutive days of arguments on maintainability and interim relief before the single-judge bench.

Four claims, one squeeze on settlements

Yes Bank had already deducted funds from PayU’s ongoing settlements toward its IRF liability. It reversed more than ₹5.95 crore but continued to withhold ₹6.88 crore, according to the court’s order, cited by Inc42 and Bar & Bench. LawChakra reports three other acquiring banks have separate claims pending: roughly ₹5.26 crore, ₹27.30 crore and ₹8.82 crore. PayU told the court it fears similar deductions if those three claims are decided against it, which is why it sought relief covering the entire IRF process rather than a single reversed deduction.

The interim order goes beyond freezing money already withheld. It bars acquiring banks from making further deductions from PayU’s settlements while mediation is underway, restrains Visa from issuing final determinations on pending IRF claims tied to past transactions, and, per LiveLaw Biz, stops issuing banks from raising new MCC-related claims on past transactions during this window. Status quo now applies to all claims arising from past transactions, not just the Yes Bank dispute that prompted the suit.

PayU’s challenge does not stop at who assigned which code. LiveLaw Biz reports PayU separately challenged Visa’s private IRF Compliance Process itself, arguing such disputes must instead be resolved under Section 24 of the Payment and Settlement Systems Act, 2007, the statutory mechanism for settling disagreements between system participants. That is a structural objection: whether a card network’s internal compliance mechanism can adjudicate fee disputes at all, not merely whether one MCC was correct.

LawChakra notes the court drew a clear line here. It clarified that RBI is being asked to mediate and facilitate a settlement, not to act as the statutory dispute resolution body under Section 24. A mediated settlement would resolve this specific dispute; it would not decide whether Visa’s private compliance process is lawful under the PSS Act, a question the October 27 hearing may or may not reach depending on how mediation proceeds.

The remedy granted reaches further than a routine fee dispute would suggest. Restraining Visa from issuing final determinations on pending claims, and barring banks from raising new MCC claims on past transactions, pauses the compliance mechanism industry-wide while RBI, not a court-appointed arbitrator, tries to broker terms. Whether that 30-day mediation window produces a settlement, or instead sends the maintainability question back before Justice Prasad on October 27, is the fact to track.

Originally reported by Inc42.