Archive · 16 Sep 2026
Paytm Shares Jump as UPI Merchant Fees Raise Outlook
Paytm's share price rose after a new fee for some UPI payments was announced.
The fee is called the Merchant Discount Rate, or MDR.
Starting October 15, merchants will pay 0.4% when customers make certain UPI payments above ₹2,000.
The fee will not be higher than ₹300 for payments of ₹75,000 or more.
People will still be able to send money to friends and family for free.
Customers cannot be charged the fee separately.
Many small merchants and most smaller merchant payments will also stay exempt.
Investors and analysts think the change could give payment companies steadier revenue.
Paytm shares rose 7.2% to ₹1,856.50, reaching a fresh 52-week high, while MobiKwik gained 6% and Pine Labs fell 6%.
The National Payments Corporation of India announced a 0.4% MDR on qualifying person-to-merchant UPI payments above ₹2,000 from October 15.
The MDR will be capped at ₹300 for transactions of ₹75,000 or more, while person-to-person payments remain free.
Consumers cannot be charged the MDR, and merchants earning up to ₹1 lakh monthly through UPI QR codes remain exempt.
Analysts and brokerages said the fee could improve revenue visibility, with Paytm's projected FY28 MDR revenue estimates reaching ₹11.2 billion.
- Who
- Paytm, MobiKwik, Pine Labs, the National Payments Corporation of India, brokerages, and digital-payments analysts.
- What
- The introduction of an MDR on certain UPI merchant payments prompted gains in Paytm and MobiKwik shares, while Pine Labs declined.
- When
- The announcement was made Tuesday, shares moved Wednesday, and the MDR takes effect October 15.
- Where
- The share movements occurred on the BSE, and the MDR applies to UPI transactions in India.
- Why
- The MDR is intended to support the sustainability of digital payments and create a recurring revenue stream for payment companies.
Revenue and Sustainability Case
Consumer and Small-Merchant Protection
Impact on payment companies
Revenue and Sustainability Case
Brokerages said the MDR replaces a discretionary subsidy model with contractual, recurring revenue and could make the payments business more self-sustaining. Emkay Global Research, JM Financial, and Bernstein responded positively to Paytm's outlook.
Consumer and Small-Merchant Protection
The new charge applies only to specified merchant payments, while person-to-person transfers and many small transactions remain free, limiting its impact on consumers and small merchants.
Who bears the charge
Revenue and Sustainability Case
Qualifying merchant payments above ₹2,000 create a new monetisable transaction pool for digital-payment companies, with one-fifth of the fee pool supporting small-merchant UPI expansion.
Consumer and Small-Merchant Protection
Consumers cannot be charged separately, app providers cannot add platform fees, and banks must prevent merchants from passing the MDR to customers.
Investment outlook
Revenue and Sustainability Case
Emkay, JM Financial, and Bernstein maintained positive views or targets for Paytm, citing potential MDR revenue and other earnings drivers.
Consumer and Small-Merchant Protection
Analyst estimates differ because brokerages use different assumptions about how much UPI transaction value qualifies for MDR; JM Financial, for example, reduced its eligible-GMV assumption because of broader carve-outs.
- MDR rate
- 0.4% on qualifying person-to-merchant UPI payments above ₹2,000
- Effective date
- October 15
- Maximum fee
- ₹300 for transactions of ₹75,000 or more
- Exempt payments
- Person-to-person transfers, payments to small vendors under the P2PM framework, and transactions up to ₹2,000
- Small-merchant exemption
- Merchants earning up to ₹1 lakh per month through UPI QR codes remain fully exempt
- Consumer protection
- Merchants pay the MDR; UPI apps cannot add platform fees and the charge cannot be passed to customers
- Paytm revenue estimate
- ₹11.2 billion, or ₹1,120 crore, in UPI MDR revenue by FY28 under Emkay Global Research's estimate
- Share-price moves
- Paytm reached ₹1,856.50, MobiKwik ₹214, and Pine Labs ₹182
