Delhi High Court Turns to RBI-Facilitated Mediation in PayU Payment-System Dispute

The Delhi High Court has asked the Reserve Bank of India (RBI) to facilitate mediation in a complex payment-system dispute involving PayU Payments Private Limited, banks and Visa, choosing a subject-matter expert from the sectoral regulator to help the parties find a solution while expressly preserving their legal and adjudicatory rights.

In an order dated 14 September 2026, Justice Subramonium Prasad requested the RBI to depute a senior officer well-versed in the subject to endeavour to find a solution within 30 days. The dispute concerns the allocation of Merchant Category Codes (MCCs) to merchants and resulting claims relating to Interchange Reimbursement Fees (IRF).

PayU's case is that it collects and verifies merchant information and forwards it to the relevant acquiring bank, while the acquiring bank assigns the MCC independently. Claims were raised alleging that incorrect MCCs assigned to certain merchants had resulted in shortfalls in interchange fees. PayU approached the Court, challenging deductions from its settlement accounts and aspects of the process through which the IRF claims were determined.

The mediation direction is particularly significant because PayU had also sought exemption from the statutory pre-litigation mediation process under Section 12A of the Commercial Courts Act, 2015. Rather than sending the parties through the ordinary pre-litigation mediation process, the Court considered the RBI better placed to facilitate discussions because PayU, Visa and the payment-system arrangements involved operate within the regulatory regime supervised by the RBI.

The Court nevertheless drew a clear distinction between mediation and adjudication. It expressly stated that the RBI would act only as a “mediator and facilitator” to find a solution on the creation and allocation of incorrect MCCs, the settlement of past transactions, and the smooth functioning of future transactions. The RBI would not act as the statutory dispute-resolution body contemplated under Section 24 of the Payment and Settlement Systems Act, 2007.

Pending the mediation, the Court directed the parties to maintain the status quo in relation to the disputed past transactions. Visa is not to issue final IRF determinations on the pending claims, the acquiring banks are not to make deductions, debits or netting from PayU in respect of those claims, and issuing banks that are parties to the proceedings are not to raise further claims for interchange income loss arising from MCC misclassification in transactions involving PayU prior to the institution of the suit while the mediation remains underway.

Importantly, the Court left the mediation process room to develop its own solution. It clarified that the mediator could suggest other solutions acceptable to the parties, and that the parties could approach the Court to modify the interim arrangement if a different solution emerged during mediation. The order also preserves the parties' existing and future contractual and legal rights, expressly leaving the underlying questions open for adjudication.

From a mediation perspective, the order illustrates the value of subject-matter expertise in choosing a mediator for technically complex disputes. The Court turned to a senior officer of the sectoral regulator not to determine the parties' rights, but to help them understand and resolve a dispute arising within a specialised regulatory and commercial system.

The order thus presents an interesting model of court-supported, expert-facilitated mediation: the Court creates space for settlement, maintains an interim framework for negotiations, and preserves adjudication if mediation does not produce an agreed solution.