Delhi High Court Directs RBI to Mediate PayU, ICICI Bank, Yes Bank, and Visa Merchant Code Dispute — September 15, 2026

In a significant intervention in India’s digital payments infrastructure, the Delhi High Court has directed the Reserve Bank of India (RBI) to step in and mediate an escalating commercial dispute involving PayU Payments, ICICI Bank, Yes Bank, and global payment network Visa. The conflict centres around the classification of merchant accounts and the calculation of interchange fees.

In an order passed by Justice Subramonium Prasad, the court instructed the banking regulator to depute a senior officer familiar with the payments ecosystem to resolve the standoff within a 30-day timeline. To avoid operational disruption across the digital payments landscape, the court also ordered the parties to maintain status quo on all disputed past transactions while the mediation process is underway.

The Core of the Dispute

The contention revolves around Merchant Category Codes (MCCs)—standardised four-digit classifications assigned to businesses to reflect their primary trade or service. In digital card payments, MCCs play a critical role in dictating the applicable interchange fee, which is paid by the acquiring bank (which processes the merchant’s transactions) to the issuing bank (which issues the card to the consumer).

ICICI Bank, operating in its capacity as a Visa card issuer, alleged that certain merchants onboarded through payment aggregator PayU were assigned inaccurate MCCs. According to the private lender, these misclassifications led to lower interchange fees being paid out on card transactions. Consequently, ICICI Bank initiated recovery claims against the acquiring banks through Visa's Interchange Reimbursement Fee (IRF) mechanism.

In response, PayU contended that it does not hold the authority to allocate MCCs. The fintech major submitted that its role is confined to collecting, conducting verification on, and forwarding merchant information to acquiring banks like Yes Bank, which then independently assign the appropriate category codes according to established industry rules.

Why the Court Brought in the RBI

Rather than sending the matter to standard pre-litigation mediation, Justice Subramonium Prasad observed that the central bank was ideally positioned to address the issue:

• The entire domestic payments architecture operates strictly under licensing certificates and direct regulatory oversight provided by the RBI.
• A specialised regulatory authority possesses the institutional competence to dissect complex interchange structures without impeding daily settlement flows.
• Deputing a senior central bank official ensures ongoing transactional continuity across banks, payment aggregators, and networks during the negotiation period.

The court noted that adopting this supervised approach guarantees that future payment processing among the commercial entities continues unhindered in the regular course of business while the underlying dispute is evaluated.

Market Implications for Indian Fintech and Banking

The outcome of the RBI-led mediation is poised to set an important precedent for India’s fintech and merchant-acquiring ecosystem:

Accountability in Merchant Onboarding: The dispute highlights the division of responsibility between payment aggregators (PAs) and partner acquiring banks. Clarification from the RBI will firmly determine where regulatory liability rests when merchant business models evolve or are wrongly catalogued.

Interchange Revenue Integrity: Card-issuing banks, including large private lenders like ICICI Bank, rely on interchange fees as a core non-interest revenue stream. Stricter MCC enforcement prevents revenue leakage and stops predatory fee arbitrage across differing commercial merchant tiers.

Regulatory Clarity for Aggregators: As payment aggregators scale volumes, dispute resolution frameworks between multinational card networks like Visa, commercial lenders, and tech intermediaries are becoming vital to prevent arbitrary clawbacks and bilateral friction.

The appointed RBI officer is expected to convene discussions among the four parties to establish a mutually agreeable settlement framework within the mandated 30-day window.

Tags: PayU ICICI Bank Yes Bank Visa Reserve Bank of India Fintech