RBI to Mediate India's Merchant Classification Row

The Delhi High Court has intervened in a dispute between PayU Payments, Yes Bank, ICICI Bank, and Visa over merchant classification and interchange fee claims. The court asked the Reserve Bank of India (RBI) to mediate the dispute and nominate a senior officer with expertise in the payments sector to facilitate discussions between the parties.

The RBI has been directed to resolve the dispute within 30 days. During this period, the parties have been ordered to maintain the status quo with respect to disputed past transactions. Visa cannot issue final Interchange Reimbursement Fee (IRF) determinations concerning those transactions, while acquiring banks have been directed not to make further deductions from PayU towards the disputed claims.

The dispute centers on Merchant Category Codes (MCCs), four-digit codes used to identify a merchant's principal business. ICICI Bank alleged that certain merchants using PayU had been assigned incorrect MCCs, resulting in lower interchange fees. It subsequently raised claims against acquiring banks through Visa's IRF mechanism.