SEBI to review brokers’ UPI MDR concerns ahead of 15 October rollout

SEBI will examine brokers’ concerns over NPCI’s proposed UPI MDR framework. Charges of 0.4% on P2M UPI payments above ₹2,000, capped at ₹300, could pressure discount-broker economics when client funds are transferred or returned unused.

— Source publishedThu, 17 Sept, 2026, 12:29 IST·First seen Thu, 17 Sept, 2026, 12:41 IST·Source Mint · Markets

What happened

SEBI · Sebi will examine brokers’ concerns over NPCI’s new UPI MDR framework, which could raise payment costs for securities transfers. Discount brokers fear

Key facts

  • 0.4% MDR on P2M UPI transactions above ₹2,000
  • ₹300 maximum MDR per transaction
  • 0.02% MDR for capital-market transactions
  • 15 October implementation date

Why this matters

Payments infrastructure, wallet, and banking partnerships could become more strategic for brokerage platforms seeking lower-cost alternatives to UPI-based client fund flows.

What to watch

  • SEBI consultation outcome or formal communication before the 15 October rollout.
  • NPCI clarification on merchant category codes and treatment of stockbroker/client-fund transactions.
  • Whether UPI MDR applies separately to deposits and refunds, and whether the ₹300 cap is per transaction or another settlement unit.
  • Broker announcements of UPI funding limits, surcharges, waived fees, or alternative payment incentives.
  • Changes in UPI share of broker deposits, average ticket size, and abandoned funding attempts after implementation.
  • Industry association representations from discount brokers, exchanges, depositories, banks, and payment aggregators.
  • Model incremental MDR exposure by average UPI deposit size, frequency, refund rate, and the ₹300 cap; identify brokers with the highest reliance on UPI funding.
  • Prepare low-friction routing to bank transfer, net banking, mandate-based transfers, and linked-bank funding for deposits above ₹2,000.
  • Review whether unused-fund returns can be netted, delayed within regulatory limits, or routed through lower-cost rails without weakening client-money safeguards.
  • Seek formal clarification from SEBI/NPCI on whether broker fund collection, margin transfer, and client refunds qualify as P2M transactions.
  • Track competitor pricing: initial fee absorption is likely, but industry-wide pass-through could emerge if MDR materially affects acquisition economics.

Also reported by