2 hrs ago
UPI MDR on Stock Payments Raises Questions Over Who Pays
Starting October 15, 2026, some UPI payments used for investing will have a small extra fee.
This fee is called the Merchant Discount Rate, or MDR.
It will be 0.02 percent of the payment, but it cannot be more than Rs 300.
The fee applies to payments involving shares, securities, mutual funds and stock brokers.
Customers are not supposed to be charged this fee directly.
Instead, the broker or other payment recipient is responsible for it.
Brokers may have difficulty paying the fee when customers deposit money but do not buy shares.
Brokers and customers will have to see how the cost is handled after the rule begins.
UPI payments linked to stocks and other capital-market transactions will attract a 0.02% MDR from October 15, 2026.
The charge will apply to payments involving shares, securities, mutual funds and stock brokers.
The MDR will be capped at Rs 300 per transaction.
NSE chief Ashish Kumar Chauhan said no discussions on the issue took place between the NSE and the government.
Although customers should not be charged the MDR directly, brokers and customers may need to determine how the cost is managed.
- Who
- Stock brokers, their customers, and other capital-market payment recipients will be affected; NSE MD and CEO Ashish Kumar Chauhan commented on the issue.
- What
- A 0.02% Merchant Discount Rate will apply to UPI payments linked to stock-market and other capital-market transactions, capped at Rs 300 per transaction.
- Where
- The issue concerns UPI payments made in connection with the stock market and other capital-market activities; the report is from Mumbai.
- When
- The charge is scheduled to begin on October 15, 2026.
- Why
- The charge is being introduced for covered UPI payments, creating uncertainty over whether brokers will absorb the cost or manage it in other ways.
Brokers Absorb the Cost
Costs Are Managed Through Customer Relationships
Who bears the MDR
Brokers Absorb the Cost
Brokers could absorb the additional payment expense because the MDR is imposed on the entity receiving the payment, not directly on customers.
Costs Are Managed Through Customer Relationships
The article says brokers and customers will have to determine how the additional cost is managed, leaving open the possibility that customers could feel its impact indirectly.
Unused deposits
Brokers Absorb the Cost
Brokers may face a financial burden when customers deposit money through UPI but later do not purchase shares or withdraw unused funds.
Costs Are Managed Through Customer Relationships
The additional cost may encourage brokers and customers to adopt another way of managing payments or related expenses, though the article does not specify what that method would be.
Key facts
- MDR rate
- 0.02% on covered UPI payments
- Effective date
- October 15, 2026
- Maximum charge
- Rs 300 per transaction
- Covered payments
- Payments involving shares, securities, mutual funds and stock brokers
- Direct customer billing
- Customers are not supposed to be charged the MDR directly
- NSE-government discussions
- Ashish Kumar Chauhan said no such discussions took place
- Potential broker issue
- Brokers may incur the fee when deposited funds are not ultimately used for purchases
Sources
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