According to reports from The Hindu BusinessLine, HDFC Securities has revealed that over 98% of its transactions on InvestRight and HDFC SKY platforms remain outside the scope of the new UPI merchant discount rate (MDR) framework. An analysis of customer transaction data between January and August showed that the two platforms processed more than 5.23 crore transactions, with approximately 5.14 crore transactions (over 98%) routed through HDFC Bank-linked 3-in-1 mandate or net banking, both outside the MDR framework. UPI accounted for only about 9.6 lakh transactions, representing less than 2% of total transactions.
As reported by The Hindu BusinessLine, HDFC Securities MD and CEO Dhiraj Relli stated that the new framework was unlikely to result in any material change to customer-facing pricing due to its payment-channel mix. The company's customers have consistently gravitated toward payment channels built for ease and reliability, which has insulated the overwhelming majority from this change. The 3-in-1 mandate route alone accounted for approximately 5.1 crore transactions, while net banking contributed another 3.6 lakh transactions. According to The Hindu BusinessLine, Relli explained that "our customers have consistently gravitated toward payment channels built for ease and reliability, and that behaviour has, as it turns out, also insulated the overwhelming majority of them from this change."
According to the report, HDFC Securities' position differs significantly from the discount broking industry, where UPI has become a major channel for funding trading accounts. Broker associations have informed SEBI that around 90% of broking transactions take place through UPI and that UPI accounts for about two-thirds of money added or traded on broking platforms. Despite being one of the largest brokers in the country, HDFC Securities' share of retail broking is considerably smaller, with around 13.5 lakh active NSE clients in August, accounting for about 3.1% of active clients on the exchange.
As reported by The Hindu BusinessLine, the new MDR framework will levy a 0.02% charge on UPI transactions in the capital-market category, including payments to stockbrokers, mutual funds, securities and dealers, subject to a cap of ₹300 per transaction, effective from October 15. The standard MDR for eligible person-to-merchant UPI transactions above ₹2,000 is 0.4%. Several brokers have raised concerns that the MDR could be triggered when money is transferred to a trading account, irrespective of whether the customer subsequently trades, potentially incurring payment costs even when transfers don't generate brokerage revenue.
According to the report, SEBI chairman Tuhin Kanta Pandey stated last week that the regulator would examine the concerns raised by stockbrokers and look at ways to ease them. The new framework represents a significant change from the current system, with the 0.02% charge being substantially lower than the standard 0.4% MDR for eligible person-to-merchant UPI transactions above ₹2,000. As reported by The Hindu BusinessLine, this regulatory response addresses the industry's concerns about the additional cost burden of UPI-based fund transfers.
