Zerodha flags broker-cost risk in proposed UPI MDR above ₹2,000
Zerodha founder Nithin Kamath said proposed merchant UPI MDR could make customer fund transfers and SEBI-mandated quarterly settlements costly for brokers. The proposal includes a 0.4% charge above ₹2,000, capped at ₹300, with a lower 0.02% rate for mutual funds and stock brokers.
What happened
Zerodha founder Nithin Kamath said proposed UPI MDR charges could create unsustainable costs for brokers, particularly on customer fund transfers and
Key facts
- 0.4% MDR on merchant UPI payments above ₹2,000
- 0.02% MDR for mutual funds and stock brokers
- ₹300 MDR cap
- ₹75,000 transaction threshold
- 95% market share held by three apps
- 10,000 customers
- 50 UPI transfers of ₹2 lakh monthly
- ₹2 crore potential broker cost
- ₹5-₹10 suggested transaction cap
Why this matters
Payments, brokerage and wealth platforms may seek partnerships or product integrations that reduce reliance on high-value UPI collections and preserve low-friction customer funding.
What to watch
- Final NPCI, RBI, or government notification defining whether broker fund transfers and SEBI-mandated quarterly settlements qualify as merchant transactions.
- Confirmation that the proposed 0.02% financial-services rate applies uniformly to stock brokers, including any cap or transaction-size threshold.
- Broker disclosures on UPI transaction value, payment costs, customer-funding mix, and revised deposit policies.
- SEBI guidance on whether MDR can be passed through to clients or embedded in settlement workflows.
- Changes in UPI transaction composition toward P2P labeling, direct bank transfers, mandates, or alternative payment rails.
- Brokerages may set minimum UPI funding thresholds, steer users toward bank-transfer rails, or subsidize MDR only for high-value customers.
- Discount brokers are likely to quantify MDR exposure in earnings commentary and lobby through industry bodies for settlement-payment exemptions.
- Payment aggregators and banks may offer broker-specific pricing, direct-account integration, and automated reconciliation products.
- Mutual fund and brokerage platforms may favor recurring mandates, net settlement cycles, and direct bank debit options over one-off UPI collect requests.
- Smaller brokers with lower transaction scale may face disproportionate compliance and payment-processing costs, accelerating platform consolidation.