When you trade in the stock markets, it is not for free. You have to pay the broker a commission as well as a small amount for the actual transaction. Usually, this brokerage commission is a percentage of the turnover – the total value of your trade.
Not Upstox. It charges flat fees, thus significantly cutting costs. This is why Upstox is a disruptor in the brokerage industry. Whether it’s a flat fee per trade, or a flat fee per month, Upstox believes in charging zero brokerage. This consequently helps the consumer in increasing savings.
But does this mean the Upstox brokerage model is not profitable? No.
In order execute its zero brokerage fee idea, Upstox came up with a revolutionary business model: an online-only business model.
While other brokerage firms have hundreds, sometimes thousands of branches sprawled across the country, RKSV has one central operational branch in BKC, Mumbai. This keeps its operative costs low and efficient.
Not having offline branches: Offline branches unnecessarily increase costs for brokers. In fact, brokers that offline branches can only recuperate the costs by charging higher brokerage fees or by providing trading terminals at the offline branches that charge higher brokerage than online fees.
Not providing tips and advisory services: Not only does this cut down on costs, but it also avoids a dangerous conflict of interest. Most brokers in India have relationship managers whose duties include providing tips, recommendations and advisory services to clients. This directly creates a conflict of interest, as the relationship managers are paid commissions and fees when their clients trade and pay brokerage. Moreover, not every recommendation is customized. So it may or may not really suit the investor’s strategy. Upstox avoids this unnecessary conflict of interest by not providing tips.
There are many independent tips providers who are not tied up with brokers. Upstox encourages clients who seek tips to look for these independent firms, limiting any conflict of interest.
Keeping overhead costs lean by leveraging technology: At its heart, Upstox is first and foremost a technology firm. Rather than using outdated technology and scaling up through unnecessary costs, Upstox always looks to solve solutions through technology.
One example of this is its online ticketing system. Whenever customers ask questions through the ticketing system, their queries get resolved promptly. This keeps unnecessary costs low while also ensuring top notch customer service.
Word of mouth referrals: Upstox also believes that the best way to grow its business is through word of mouth referrals. Therefore, it avoids unnecessary marketing costs. It instead believes that a satisfied customer would automatically refer their friends. And that’s why technology and customer service are bigger priorities for Upstox.
By keeping overhead costs low, prioritizing customer service and embracing technology, Upstox is a profitable firm with tens of thousands of clients across the country.
Through transparency, it has built trust among its customers. For example, its transparent brokerage calculator breaks down all costs involved in a trade. This assures customers that whatever they do pay for is minimal and worth it.
With more and more offline traders embracing its online, low-cost brokerage model, Upstox aims to continue scaling this business model.