The Merchant Discount Rate (MDR) will apply to UPI transactions. This fee will even cover payments relating to mutual funds and stockbroking as well. But naturally, common people are curious to know if this affects them, or if mutual fund companies and brokers will pass this extra expense onto them.

MDR fees will apply to select UPI transactions from October 15. The fee will apply to lump sum investments made in mutual funds, debt market payments, and broker wallet recharge transactions done using UPI. The charge will be based on the transaction amount for transactions up to ₹1.5 million, whereas a cap of ₹300 has been put on transactions beyond ₹1.5 million.

Good news is, mutual fund SIPs through UPI Autopay transactions are exempt from this charge. Those who make lump sum investments through UPI will have to pay this MDR of 0.02%. Experts believe that mutual fund industry can bear this cost without passing on to investors. But if people keep transferring funds into and out of liquid funds repeatedly, the cost for the fund house will rise. And some companies may advise investors to use other methods like net banking and NEFT.

All brokerage firms will be affected, especially discount brokers and those offering zero brokerage. Brokers say that investors often transfer money to their trading accounts, but they don't necessarily trade immediately. Even if they simply top up their wallet without trading, brokers will incur this fee.

There is a fear that brokers may pass on this cost directly or indirectly to their clients or encourage them to use other means instead of UPI transfers. Zerodha founder Nitin Kamat has stated on social media that if every UPI transfer incurs a cost, it will be difficult to absorb it indefinitely.

The Merchant Discount Rate (MDR) will apply to UPI transactions. This fee will even cover payments relating to mutual funds and stockbroking as well. But naturally, common people are curious to know if this affects them, or if mutual fund companies and brokers will pass this extra expense onto them.

MDR fees will apply to select UPI transactions from October 15. The fee will apply to lump sum investments made in mutual funds, debt market payments, and broker wallet recharge transactions done using UPI. The charge will be based on the transaction amount for transactions up to ₹1.5 million, whereas a cap of ₹300 has been put on transactions beyond ₹1.5 million.

Good news is, mutual fund SIPs through UPI Autopay transactions are exempt from this charge. Those who make lump sum investments through UPI will have to pay this MDR of 0.02%. Experts believe that mutual fund industry can bear this cost without passing on to investors. But if people keep transferring funds into and out of liquid funds repeatedly, the cost for the fund house will rise. And some companies may advise investors to use other methods like net banking and NEFT.

All brokerage firms will be affected, especially discount brokers and those offering zero brokerage. Brokers say that investors often transfer money to their trading accounts, but they don't necessarily trade immediately. Even if they simply top up their wallet without trading, brokers will incur this fee.

There is a fear that brokers may pass on this cost directly or indirectly to their clients or encourage them to use other means instead of UPI transfers. Zerodha founder Nitin Kamat has stated on social media that if every UPI transfer incurs a cost, it will be difficult to absorb it indefinitely.