UPI MDR revision from Oct 15: Mutual funds, securities, stockbrokers to attract 0.02% charge; check details
At 0.02%, the MDR on a Rs 1 lakh transaction would work out to Rs 20. The Rs 300 maximum cap also limits the charge on larger transactions.
- Sep 15, 2026,
- Updated Sep 15, 2026 8:34 PM IST
The Merchant Discount Rate (MDR) for UPI payments in capital market transactions has been set at a nominal 0.02% of the transaction value, capped at Rs 300 per transaction. The lower rate is aimed at supporting retail participation in formal financial markets while helping sustain the digital payments ecosystem.
The MDR will apply to capital market-related payments, including transactions involving mutual funds, securities, stockbrokers and dealers. UPI has emerged as a key payment channel for retail investors and is widely used for IPO applications, mutual fund investments and payments or transfers linked to broking accounts.
How much will investors pay?
At 0.02%, the MDR on a Rs 1 lakh transaction would work out to Rs 20. The Rs 300 maximum cap also limits the charge on larger transactions, making the capital market MDR considerably lower than the 0.4% rate applicable to eligible commercial person-to-merchant (P2M) UPI transactions above Rs 2,000.
The lower rate has been introduced to support continued retail participation in formal financial markets, according to the Ministry of Finance.
However, the impact on investors will depend on how brokers, mutual fund platforms and other intermediaries treat the cost. If intermediaries absorb the MDR, investors may see little or no direct impact. If the cost is passed on, investors could face a small additional expense on UPI payments linked to market transactions.
| UPI payment type | MDR from October 15, 2026 | What it means |
|---|---|---|
| UPI Mandate / AutoPay | No prescribed MDR | Recurring payments such as SIPs, insurance subscriptions, utility bills and OTT subscriptions remain unaffected |
| Mutual fund SIP via AutoPay | No prescribed MDR | Automatic monthly SIP debits through UPI Mandates continue without the new MDR |
| One-time mutual fund payment | 0.02%, capped at ₹300 | Applies under the concessional capital-market category |
| Equity/debt market payments | 0.02%, capped at ₹300 | Covers eligible payments to regulated capital-market entities |
| Broker wallet top-ups | 0.02%, capped at ₹300 | Falls under the capital-market category |
| Insurance payment above ₹2,000 | ₹5 flat MDR | Applies to eligible P2M insurance payments |
| Regular P2M payment above ₹2,000 | 0.4% | Standard MDR for eligible merchant transactions |
| P2M payment of ₹75,000 and above | 0.4%, capped at ₹300 | Maximum MDR is ₹300 per transaction |
MUST READ: Are school, college fee payments exempt from standard UPI MDR? Here’s what parents need to note
NSE expects short-term impact on volumes
NSE Managing Director and Chief Executive Officer Ashishkumar Chauhan said the introduction of MDR could affect trading volumes routed through UPI in the short term, although the impact is expected to stabilise over time.
“MDR on UPI might impact trading volumes via UPI in the short term, but is likely to stabilise in the long term,” Chauhan said.
The near-term impact could be more visible in frequent trading-related payments than in long-term investment flows. Investors making monthly SIPs or occasional lump-sum mutual fund payments may have limited incentive to change their behaviour because of the relatively small fee.
Active traders, however, who make frequent payments or move funds through UPI more often, could be more sensitive to any additional cost.
ALSO READ: UPI MDR new rules: 0.4% charge above ₹2,000, ₹300 cap on high-value payments; see FAQs
Customers not to be charged directly
MDR is a charge within the merchant payment ecosystem and is not a fee collected by the government or NPCI. Banks have been advised to ensure that merchants do not pass MDR charges on to customers, while UPI application providers are prohibited from imposing platform fees or hidden charges.
The government estimates that only around 4% of merchant transactions will be affected by the MDR framework, as most transactions either fall below the Rs 2,000 threshold or qualify under the zero-MDR P2PM framework.
To support smaller merchants, the government will also create a dedicated fund using 5% of total MDR collections, aimed at expanding UPI acceptance among small businesses.
The Merchant Discount Rate (MDR) for UPI payments in capital market transactions has been set at a nominal 0.02% of the transaction value, capped at Rs 300 per transaction. The lower rate is aimed at supporting retail participation in formal financial markets while helping sustain the digital payments ecosystem.
The MDR will apply to capital market-related payments, including transactions involving mutual funds, securities, stockbrokers and dealers. UPI has emerged as a key payment channel for retail investors and is widely used for IPO applications, mutual fund investments and payments or transfers linked to broking accounts.
How much will investors pay?
At 0.02%, the MDR on a Rs 1 lakh transaction would work out to Rs 20. The Rs 300 maximum cap also limits the charge on larger transactions, making the capital market MDR considerably lower than the 0.4% rate applicable to eligible commercial person-to-merchant (P2M) UPI transactions above Rs 2,000.
The lower rate has been introduced to support continued retail participation in formal financial markets, according to the Ministry of Finance.
However, the impact on investors will depend on how brokers, mutual fund platforms and other intermediaries treat the cost. If intermediaries absorb the MDR, investors may see little or no direct impact. If the cost is passed on, investors could face a small additional expense on UPI payments linked to market transactions.
| UPI payment type | MDR from October 15, 2026 | What it means |
|---|---|---|
| UPI Mandate / AutoPay | No prescribed MDR | Recurring payments such as SIPs, insurance subscriptions, utility bills and OTT subscriptions remain unaffected |
| Mutual fund SIP via AutoPay | No prescribed MDR | Automatic monthly SIP debits through UPI Mandates continue without the new MDR |
| One-time mutual fund payment | 0.02%, capped at ₹300 | Applies under the concessional capital-market category |
| Equity/debt market payments | 0.02%, capped at ₹300 | Covers eligible payments to regulated capital-market entities |
| Broker wallet top-ups | 0.02%, capped at ₹300 | Falls under the capital-market category |
| Insurance payment above ₹2,000 | ₹5 flat MDR | Applies to eligible P2M insurance payments |
| Regular P2M payment above ₹2,000 | 0.4% | Standard MDR for eligible merchant transactions |
| P2M payment of ₹75,000 and above | 0.4%, capped at ₹300 | Maximum MDR is ₹300 per transaction |
MUST READ: Are school, college fee payments exempt from standard UPI MDR? Here’s what parents need to note
NSE expects short-term impact on volumes
NSE Managing Director and Chief Executive Officer Ashishkumar Chauhan said the introduction of MDR could affect trading volumes routed through UPI in the short term, although the impact is expected to stabilise over time.
“MDR on UPI might impact trading volumes via UPI in the short term, but is likely to stabilise in the long term,” Chauhan said.
The near-term impact could be more visible in frequent trading-related payments than in long-term investment flows. Investors making monthly SIPs or occasional lump-sum mutual fund payments may have limited incentive to change their behaviour because of the relatively small fee.
Active traders, however, who make frequent payments or move funds through UPI more often, could be more sensitive to any additional cost.
ALSO READ: UPI MDR new rules: 0.4% charge above ₹2,000, ₹300 cap on high-value payments; see FAQs
Customers not to be charged directly
MDR is a charge within the merchant payment ecosystem and is not a fee collected by the government or NPCI. Banks have been advised to ensure that merchants do not pass MDR charges on to customers, while UPI application providers are prohibited from imposing platform fees or hidden charges.
The government estimates that only around 4% of merchant transactions will be affected by the MDR framework, as most transactions either fall below the Rs 2,000 threshold or qualify under the zero-MDR P2PM framework.
To support smaller merchants, the government will also create a dedicated fund using 5% of total MDR collections, aimed at expanding UPI acceptance among small businesses.