Delhi High Court orders RBI to mediate PayU, Visa, and bank dispute

The Delhi High Court has directed the Reserve Bank of India (RBI) to mediate a dispute involving PayU Payments, Yes Bank, ICICI Bank, and Visa regarding the classification of Merchant Category Codes (MCCs).

The conflict centers on allegations that certain merchants using PayU were assigned incorrect MCCs, which are four-digit codes used to determine applicable interchange fees. ICICI Bank, a Visa card issuer, alleged that these misclassifications resulted in lower interchange fees and subsequently raised claims against acquiring banks through Visa’s Interchange Reimbursement Fee (IRF) process. PayU has disputed liability, stating it collects and verifies business information but does not assign the codes; rather, acquiring banks assign them independently.

Justice Subramonium Prasad has ordered the RBI to depute a senior officer with expertise in the payments sector to facilitate a resolution within 30 days. The court clarified that the RBI’s role is limited to mediation and facilitation and does not constitute acting as a dispute-resolution authority under the Payment and Settlement Systems Act, 2007.

As an interim measure, the court ordered all parties to maintain the status quo on disputed past transactions. This includes a directive for Visa to withhold final IRF determinations on pending claims and an order for Yes Bank and other acquiring banks to cease any deductions, debits, or netting from PayU settlements related to these specific claims while mediation is ongoing.