Capital markets get MDR relief, brokers flag hidden costs

The proposed 0.02% merchant discount rate (MDR) on UPI transactions in the capital markets is expected to have a limited impact on retail investors, but could raise costs for brokers depending on the frequency and size of fund transfers. The proposed rate is significantly lower than the 0.4% MDR for other UPI transactions and is capped at Rs 300 per transaction.

“The headlines around the new UPI charge have understandably focused on the 0.4% MDR, but what deserves equal attention is the decision to carve out capital market transactions into their own category at just 0.02%, capped at Rs 300,” said Dhiraj Relli, MD & CEO, HDFC Securities.