World · India Bureau
India imposes UPI charges on stock and mutual fund purchases
The government has introduced a 0.02 per cent Merchant Discount Rate (MDR) charge on UPI transactions for stock and mutual fund purchases, payable by brokerages and asset management companies. Experts warn the cost may ultimately be passed on to retail investors.
LSN India ·
India's financial regulator has implemented a new MDR charge structure affecting digital payments for securities and mutual fund investments made through UPI platforms. The 0.02 per cent levy, which becomes effective immediately, applies to all stock purchases and SIP (Systematic Investment Plan) transactions conducted via UPI.
Brokerages and asset management companies are officially designated as payment recipients responsible for absorbing the MDR charge. However, financial analysts caution that intermediaries may indirectly transfer these costs to individual investors through revised fee structures, reduced incentives, or adjusted service charges.
The charge was introduced as part of broader regulations governing digital payment channels for financial transactions. While the percentage appears nominal, the cumulative impact on high-frequency traders and regular SIP contributors could be significant over time.
Industry experts advise investors to monitor their brokerage platforms for any fee adjustments following implementation. The move reflects regulatory efforts to formalize digital payment infrastructure for securities trading while maintaining oversight of transaction costs in the retail investment segment.
Retail investors are urged to review their brokerage agreements and SIP terms to understand how the new charges may affect their investment outflows and portfolio management costs going forward.