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UPI MDR Charges: SIPs Exempt, Lump-Sum Mutual Fund Investments and Broker Wallets to Face Fee
MDR impact on UPI: From October 15th, MDR will be applicable on select UPI transactions. Mutual fund UPI autopay SIPs will be exempt, while lump-sum investments will incur a 0.02% fee. Broker wallet top-ups will also be covered, which could increase costs for brokerage companies and potentially impact customers.
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.
