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Informist, Wednesday, Sept. 16, 2026

 

MUMBAI – Equity brokerage Zerodha Broking Ltd.'s founder and managing director Nithin Kamath Wednesday said his brokerage firm will find it difficult to absorb "indefinitely" the additional costs for it that emanate from the 0.4% merchant discount rate on merchant payments above INR 2,000 through the Unified Payments Interface. "The problem with broking is that there is no guarantee that money transferred to a broker (by a client) will actually result in a transaction," he said in a social media post on X Wednesday.

 

According to Kamath brokers cannot "force a customer to trade after transferring money," and if they cannot pass the UPI charge onto the customer, "there is essentially no limit to the cost a customer can impose on a broker without generating any revenue." 

 

 

Giving an example of 10,000 customers making 50 UPI transfers of INR 200,000 in a month without executing a single trade, Kamath said at the proposed merchant discount rate it would potentially cost the broker around INR 20 million without generating any business.

 

Kamath said an additional cost-related challenge is from the Securities and Exchange Board of India's regulations requiring brokers to send unused funds back to clients every month or quarter. "Most customers then transfer these funds back to their broking accounts, with more than half of these transfers happening through UPI. So regulation essentially forces this movement of money every month or quarter, and the broker could end up bearing the cost when the money comes back, without any incremental benefit or revenue," Kamath said in the social media post.

 

Zerodha Broking currently does not charge brokerage on equity delivery trades, according to Kamath, because the economics allows it. "But if every UPI transfer starts carrying an additional cost, irrespective of whether the customer actually trades, I don't see how we can absorb this indefinitely," he said.  End

 

Reported by Rajesh Gajra

Edited by Akul Nishant Akhoury

 

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