Mumbai: The upcoming Merchant Discount Rate (MDR) on UPI payments will extend beyond regular merchants to transactions linked to the stock market, raising questions over whether brokers will absorb the additional cost or customers could eventually feel its impact.
Reports had suggested that the National Stock Exchange (NSE) was discussing the issue with the government. However, NSE MD and CEO Ashish Kumar Chauhan has clarified that no such discussions have taken place.
What Did NSE CEO Say?
In an interaction with The Economic Times, Chauhan said the new UPI MDR is essentially an issue between stock brokers and their customers.
According to him, brokers and clients will have to determine how the additional payment cost is managed once the new framework takes effect.
MDR From October 15
From October 15, 2026, UPI payments linked to the stock market and other capital-market activities will attract an MDR of 0.02 per cent.
The charge will cover payments associated with shares, securities, mutual funds and stock brokers.
However, the MDR will be capped at Rs 300 per transaction. This means the fee cannot exceed Rs 300 even when the transaction value is substantially higher.
Will Customers Pay?
Customers are not supposed to be charged the MDR directly. The fee is imposed on the merchant, or the entity receiving the payment.
The key question, however, is whether brokers and other financial intermediaries will absorb this additional expense themselves or find other ways of managing the cost.
Why Brokers Face A Challenge
Consider an investor transferring money through UPI into a broker's account but subsequently deciding not to purchase any shares.
The broker could still face the MDR cost on the UPI payment despite no trade eventually taking place.
This creates a potential cost challenge for brokerage firms, particularly when customers deposit and later withdraw unused funds.
Chauhan indicated that the market will now have to see how brokers and customers respond to the new charge after its implementation.
