New charges on UPI payments: Here’s what you will be charged for stock market investments

The MDR will apply to capital market-related payments, including payments towards mutual funds, securities, stockbrokers and dealers. UPI is one of the key payment channel for retail investors. It is widely used for IPO applications, mutual fund transactions and transfers linked to broking accounts.

NSE MD and CEO Ashishkumar Chauhan said the MDR on UPI could affect trading volumes routed through UPI in the short term, but the impact is likely to stabilise over time. “MDR on UPI might impact trading volumes via UPI in the short term, but is likely to stabilise in the long term,” Chauhan said.

For the market, it remains to be seen how brokers, mutual fund platforms and other intermediaries treat the cost. If the fee is absorbed by intermediaries, the impact on investors may remain limited. If it is passed on, investors could see a small additional cost on payments linked to market transactions.

At 0.02%, the fee works out to Rs 20 on a Rs 1 lakh transaction. The Rs 300 cap also limits the charge on larger transactions. That makes the capital market rate much lower than typical commercial transaction charges.

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The near-term impact may be felt more in frequent trading-related payments than in long-term investment flows. Mutual fund investors making monthly SIPs or occasional lump-sum payments may not change behaviour much. Active traders who move funds more often may be more sensitive to any added cost.
Disclosure: This article has been written by Podishetti Akash, who is not a SEBI-registered Research Analyst or an Investment Adviser. Podishetti Akash and her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment.