Policy · Financial Services

Zerodha pushes for UPI fee cap amid new rules

By Startup Enthusiast · 16 September 2026

What they do

Zerodha is a major Indian stock broker with over 1.8 crore customers managing significant equity investments

The company and peers plan to ask SEBI to cap UPI transaction fees at ₹5 or raise the exemption limit

New rules impose charges on large transfers that could cost brokers millions without passing costs to clients

Zerodha and other brokers are preparing to represent their concerns to SEBI regarding new payment rules.
The group plans to propose capping the UPI MDR charge for broking transactions at ₹5 or ₹10.
They also seek to raise the zero-MDR threshold from ₹2,000 to ₹20,000 for small transactions.
Brokers argue that mandatory periodic settlement of client funds drives high volumes of UPI transfers.
The finance ministry stated that these new Merchant Discount Rates cannot be passed on to customers.
This restriction forces brokers to absorb costs that could amount to crores annually based on transaction volume.
The new UPI MDR framework becomes effective on October 15, impacting capital market transactions immediately.

Brokerages rely on UPI for more than half of redeposited funds after regulatory settlement cycles.
High transaction volumes mean even small percentage fees result in substantial operational costs for firms.
Competitors like PhonePe benefit from sharing MDR revenue across their broader payments business ecosystem.
The policy shift aims to monetize digital payments but creates friction for specific financial service verticals.

Zerodha offers investment options including stocks, IPOs, derivatives, mutual funds, ETFs, and bonds.
The firm manages approximately ₹9 lakh crores of equity investments across its user base.
It contributes to roughly 15% of daily retail exchange trading volumes in India.
Zerodha provides free account opening and free equity delivery trades for its retail investors.
Intraday and F&O trades carry a flat fee of ₹20 per executed order.
The company operates education platforms like Varsity and TradingQ&A for market learning.
Zerodha has invested in over 30 fintech startups through its venture arm Rainmatter.
Products include Kite demo, Kite Connect APIs, Nudge, and Kill Switch for traders.
The ecosystem includes media ventures like WTF Podcast and Zero1 Network for audience engagement.

Brokers plan to formally present their proposals to SEBI before the October 15 implementation date.
The representation likely includes requests to reconsider mandatory periodic settlement requirements.