Indian Investors Spared New UPI Fees on Stock and Mutual Fund Payments Investors using the Unified Payments Interface (UPI) for stock market transactions and mutual fund...
Investors using the Unified Payments Interface (UPI) for stock market transactions and mutual fund systematic investment plans (SIPs) can be assured that their costs will not increase, following a crucial clarification from the National Payments Corporation of India (NPCI).
Recent regulatory updates introducing an interchange fee on select UPI transactions had sparked concerns about new charges on investment-related payments. However, the NPCI has confirmed that these fees will not be levied on transactions related to capital markets, mutual funds, or insurance.
The NPCI has implemented an interchange fee of up to 1.1% on UPI merchant transactions exceeding ₹2,000. Crucially, this fee applies only when the payment is made using a prepaid payment instrument (PPI), such as a digital wallet. The fee is designed to cover costs for service providers in the payments ecosystem. It does not apply to the vast majority of UPI transactions, which are direct bank account-to-bank account transfers.
The circular explicitly carves out exemptions for several key sectors to prevent disruption. Payments for capital markets, insurance, mutual funds, education, and government services are exempt from the new interchange fee. This ensures that the digital investment infrastructure, which relies heavily on the seamless and low-cost nature of UPI, remains unaffected.
The NPCI has emphasized that over 99.9% of all UPI transactions will not be impacted by this change. For the small fraction of PPI-based merchant payments that are affected, the interchange fee is paid by the merchant’s bank to the wallet issuer. While merchants in non-exempt categories may choose to pass this cost on to consumers, users making payments directly from their bank accounts will face no new charges. Industry players like Paytm Payments Bank have also issued statements to reassure customers that standard UPI use remains free.
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