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New UPI MDR: Capital Market Brokers Face Rising Costs, Investors May See Changes
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Firstpost•21-09-2026, 12:25
New UPI MDR: Capital Market Brokers Face Rising Costs, Investors May See Changes
- •A new 0.02% MDR on UPI payments for stockbrokers and mutual funds, effective October 15, could increase transaction costs in capital markets.
- •Brokers are concerned about being charged MDR even when investors only transfer money to a trading account without executing a trade, as the funds remain the customer's.
- •The charge is capped at Rs 300 per transaction, but brokers argue this cap is largely ineffective for typical capital market UPI transactions, which often fall below the Rs 15 lakh threshold needed to reach the cap.
- •One-time mutual fund investments via UPI will incur the 0.02% MDR, but recurring SIP payments made through UPI AutoPay are exempt.
- •The industry is seeking a different approach, arguing that fund transfers to brokerage accounts are not equivalent to merchant payments and should not incur repeated charges on the same capital.
Key Questions Answered
A new 0.02 percent MDR on UPI payments linked to stockbrokers, securities, and mutual funds will be introduced from October 15, capped at Rs 300 per transaction.
Brokers are concerned because funds transferred into a trading account via UPI are not purchases, and unused capital may be repeatedly charged when returned and re-transferred under SEBI rules without generating any revenue.
No, recurring mutual fund SIP payments made through UPI AutoPay remain exempt because recurring mandates are outside the scope of the new charge.
