UPI MDR of 0.02% could pressure India’s ₹0-brokerage business model.
Investors face limited direct costs, with ₹1 lakh attracting ₹20 MDR.
Frequent fund transfers and quarterly settlements could increase brokers’ payment costs.
UPI MDR For Capital Markets: Why A Tiny Fee Could Test India’s Zero-brokerage Model
The charge is unlikely to materially affect most retail investors, but repeated UPI pay-ins, quarterly settlements and high-frequency transfers could turn the small MDR into a significant cost for discount and zero-brokerage platforms
Summary
Summary
Starting October 15, selected UPI payments above ₹2,000 will attract a Merchant Discount Rate (MDR), but the change does not mean every UPI transaction above that threshold will suddenly become chargeable.
The rules create separate treatment for recurring payments through UPI AutoPay and mandates, while transactions linked to mutual funds and other capital-market activities will fall under a lower MDR structure.
For investors, the immediate impact may appear negligible. The Merchant Discount Rate for capital-market transactions, including payments towards mutual funds, securities, stockbrokers and dealers, has been set at 0.02% of the transaction value, capped at ₹300 per transaction.
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