UPI charges may push Indian brokers back to netbanking

Indian stockbrokers may reconsider their payment strategies as fresh charges on UPI transactions come into effect, potentially shifting high-value transfer volumes back towards netbanking channels.

The introduction of a 0.02 per cent merchant discount rate (MDR) on UPI transactions from October 15 is prompting brokers to reassess their settlement options. Netbanking, which levies a fixed charge of Rs 8-12 per transaction regardless of amount, becomes increasingly attractive for larger transfers where percentage-based fees mount significantly.

For brokers processing substantial daily transactions, the flat-fee structure of netbanking offers predictable costs that compare favourably against the variable charges now applicable to UPI payments. Large institutional transfers that previously favoured UPI's digital convenience may find the mathematics shifting in netbanking's favour.

The shift reflects ongoing adjustments in India's digital payments ecosystem as regulatory authorities and payment system operators recalibrate fee structures. Brokers are expected to conduct cost-benefit analyses to optimise their payment routing, balancing convenience, speed, and expense considerations across different transaction sizes.

The development underscores how changes in payment infrastructure costs can influence financial sector practices, particularly in high-volume transaction environments such as stock market operations where per-transaction economics matter significantly.