Indian Stock‑Market Payments to Bear New UPI Merchant Discount Rate from 15 October 2026

From 15 October 2026, United Payments Interface (UPI) transfers that can be used to buy shares, securities, or mutual funds will attract a Merchant Discount Rate of 0.02 per cent. The fee is capped at a maximum of ₹300 for each transaction, regardless of the payment amount. This charge will only apply to the merchant—namely the broker or financial intermediary that receives the payment—rather than directly to end‑customers.^[1]

The new rule places the financial burden on brokerage firms. Even if money is wired to a broker’s account via UPI and the investor chooses not to trade, the broker would still levy the MDR on that transfer. This could turn routine, even unused deposits, into costly transactions for companies that may need to absorb the expense or transfer it to clients, a decision currently left to individual broker‑customer dynamics.^[1]

In a development showing growing scrutiny over the new charge, the Supreme Court requested that Prime Minister Narendra Modi and the government present an explanation to the RBI and the TUTC‑DSKC committee detailing how the MDR will be applied to capital‑market payments. The court’s demand indicates a push for clearer guidelines before the fee becomes operational.^[2]

Stakeholder Outlook

Brokers face a dilemma: absorbing the MDR could reduce profitability, while passing it on might strain client relationships. Some firms may explore adding the cost to advisory or transaction fees, whereas others might maintain current pricing and take the hit. The regime shift signals an emergent cost‑allocation battle within the securities space.^[1]