From October 2026, India introduces a revised UPI framework that exempts person-to-person payments but imposes fees on small merchants and investment transactions, prompting protests from petrol dealers and stockbrokers amid regulatory scrutiny.
From 15 October 2026, India’s revised UPI merchant discount rate framework will leave person-to-person payments free and keep most small merchant transactions outside the charge, but it will impose a 0.02% fee, capped at Rs300 per transaction, on payments linked to mutual funds, securities, stockbrokers and dealers. The government has also set a flat Rs5 charge for fuel, insurance, telecoms and other thin-margin sectors on qualifying UPI payments above Rs2,000. (pib.gov.in)
That change has triggered pushback from petrol dealers, who want a complete waiver. Dealers argue that fuel prices are regulated and their commissions are fixed, leaving them no room to absorb extra payment costs. They have also complained about settlement delays, opaque deductions and account freezes tied to cyber-fraud probes, adding to frustration over the new framework. (livemint.com)
Stockbrokers are making a different case. They want a lower, flat MDR cap, saying clients can move money into brokerage accounts without placing trades, which leaves brokers bearing a payment cost without earning matching brokerage revenue. Zerodha co-founder Nithin Kamath has argued that the proposed structure could make UPI uneconomic for broking firms, especially if charges cannot be passed on to customers. (economictimes.indiatimes.com)
The concern is large enough to draw regulatory attention. SEBI chairman Tuhin Kanta Pandey has said the market watchdog will examine the issues raised by brokers, according to reports from Reuters and other outlets. The scale of the business explains the sensitivity: securities brokers and dealers recorded 84.12 million UPI transactions worth Rs63,667.21 crore in August, with the industry estimating an annual cost of about Rs125 crore under the current framework. (business-standard.com)
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