Groww: Proposed UPI MDR cap 'not affordable' for stockbrokers
Indian tech firm Groww argues the proposed Rs 300 cap on UPI Merchant Discount Rate (MDR) for capital market transactions is not economically viable. The company states it could impact both brokers and customers.
Indian fintech company Groww has voiced concerns over the proposed Rs 300 (approximately $3.6) cap on the Merchant Discount Rate (MDR) for United Payments Interface (UPI) transactions within the capital markets. Groww co-founder and CFO Ishan Bansal stated that this fee is "not affordable" for stockbrokers, citing instances where customers frequently add funds to broker wallets without executing actual trades.
Bansal explained that if brokers must bear the UPI fee even when customers only add money without transacting, it becomes financially unviable. The company is actively making its case to regulators to prevent the MDR from becoming prohibitively high. While Groww doesn't anticipate a significant impact on its costs, the final outcome will depend on the precise MDR percentage, which could range from 0.02% to 0.4%.
Groww has submitted a letter to the Securities and Exchange Board of India (SEBI) recommending a differentiated MDR pricing structure for capital market use cases. Other major brokers, including Angel One and Zerodha, have also raised similar objections and proposed a lower cap of Rs 5, alongside an increased zero-MDR threshold to Rs 20,000.
The MDR framework, announced by NPCI on September 15, includes a 0.4% charge on certain UPI transactions exceeding Rs 2,000, capped at Rs 300 for transactions of Rs 75,000 and above. For capital market transactions, including investments in mutual funds and securities, the MDR is set at 0.02% of the transaction value, capped at Rs 300. Person-to-person (P2P) UPI transactions will remain exempt from MDR.