Zerodha is India’s largest stockbroker, known for its discount pricing, clean interface, and technology-led trading experience. At a time when traditional brokers charged high commissions, Zerodha introduced a flat-fee structure and revolutionized retail investing in India. Despite offering “free equity delivery trading,” the company is extremely profitable with minimal marketing and a lean, tech-focused team.

So how does Zerodha actually make money? Here’s a clear breakdown of their business model and revenue sources.

Understanding Zerodha’s Core Business

Zerodha operates as a discount brokerage platform that allows users to trade:

• Stocks
• Futures & Options
• Commodities
• Currencies
• Mutual Funds
• Bonds and sovereign securities

Their model focuses on low costs, high volume, and efficient technology, attracting millions of users who prefer simple and affordable trading.

Key Components of Zerodha’s Business Model

a) Technology-First Approach

Zerodha’s platforms—Kite, Console, Coin, Varsity—are built in-house. This reduces operational costs and improves scalability.

b) Zero-Commission Equity Delivery

Equity delivery trades (long-term investments) are free. This attracts beginners and long-term investors.

c) Lean Operations

No expensive branches or large sales teams. This keeps costs extremely low.

d) High User Base + Strong Activity

With millions of active traders, even small fees collected per trade generate large revenue.

e) Trust and Transparency

Zerodha’s no-hidden-fee policy builds loyalty and keeps customers for years.

How Zerodha Actually Makes Money?

Now let’s break down each revenue stream in detail.

a) Brokerage Fees on Intraday & F&O Trading (Major Revenue Source)

Zerodha charges ₹20 per executed order, or 0.03%, whichever is lower, on:

• Intraday equity
• Futures
• Options
• Commodity trading
• Currency trading

Since India has a very active F&O market, this becomes Zerodha’s biggest source of income.

Higher volume = higher brokerage revenue.

b) Interest on Margin Funding

Zerodha offers Margin Trading Facility (MTF) for buying stocks with borrowed money. They charge interest on the borrowed amount.

This interest income is a strong and consistent revenue stream.

c) Interest on Client Funds

When traders keep money in their Zerodha account, that money sits in partner bank pools. Zerodha earns interest on these idle funds.

Even a small percentage becomes big when millions of accounts are involved.

d) Call & Trade Charges

If a customer places an order through Zerodha’s support desk instead of using the app, they pay:

• ₹50 per call

This adds to revenue and encourages digital usage.

e) Annual Account Maintenance Charges (AMC)

Zerodha earns:

• ₹300/year for demat account maintenance

This is a recurring, predictable revenue source.

f) DP Charges on Demat Transactions

Whenever users sell stocks, CDSL charges a fee. Zerodha adds a small markup on top of the depository fee.

This fee applies to every demat debit transaction.

g) Coin Platform (Mutual Fund Distribution)

Zerodha does not charge commissions to investors, but they earn indirectly through:

• Account AMC
• Increased platform stickiness
• Higher trading activity from mutual fund investors

Coin strengthens customer retention, indirectly boosting revenue from other segments.

h) Partnerships & Technology Products

Zerodha earns money through products built under Rainmatter, their startup incubator. This includes investments in fintech startups like:

• Smallcase
• Streak
• GoldenPi
• Ditto Insurance

Revenue comes from:

• Equity stakes
• Profit sharing
• Platform integration fees

i) API Charges

Developers and algo traders can use Zerodha’s Kite APIs by paying:

• ₹2,000 per month per user

This creates a steady income stream from fintech users.

j) Educational Platforms

Zerodha’s Varsity and other learning tools don’t directly charge users but strengthen brand trust and retention.

Indirectly, this brings more trading activity.

Why Zerodha’s Business Model Works So Well

Zerodha has built a highly profitable business despite low fees. Here’s why:

a) Low Cost = High Volume

Zerodha earns small fees from a massive user base, creating strong cumulative revenue.

b) Minimal Marketing Expenses

Most growth comes from word of mouth.
This keeps customer acquisition cost (CAC) extremely low.

c) In-House Technology

By building everything internally, Zerodha avoids expensive third-party costs.

d) No Franchise or Branch Network

Traditional brokers spend heavily on branches.
Zerodha’s digital-only model keeps overhead minimal.

e) High Active User Base

Millions of daily orders create consistent, reliable income.

f) Float Income on Idle Balances

Interest earned from client funds is a silent yet powerful revenue stream.

Challenges Zerodha Faces

Even with a strong model, Zerodha has its share of difficulties:

• Heavy competition from Upstox, Groww, Angel One
• High customer expectations for zero downtime
• Regulatory pressure on F&O trading
• Volatile markets affecting trading volumes
• Need for continuous tech upgrades

Zerodha must innovate constantly to maintain leadership.

The Future of Zerodha’s Growth

Zerodha plans to grow through:

• Deeper involvement in fintech startups
• Expansion of insurance through Ditto
• Improved mutual fund offerings
• Stronger educational platforms
• Growing the margin funding ecosystem
• API-based trading expansion

The focus remains on technology, transparency, and long-term trust.

Conclusion

Zerodha makes money through brokerage fees on intraday and F&O trading, interest on margin funding, AMC charges, DP fees, call & trade charges, API fees, and revenue from fintech partnerships. Their lean, digital-first model keeps costs low and profitability high. By combining strong technology with a transparent pricing structure, Zerodha has built one of India’s most successful and trusted financial platforms.