Paytm, MobiKwik and Pine Labs shares rise after government announces MDR on select UPI payments

Digital payments companies including Paytm and Mobikwik witnessed strong buying interest on Wednesday after the introduction of Merchant Discount Rate (MDR) charges on certain UPI transactions raised expectations of improved revenue visibility for the sector.Paytm shares gained 7% to touch a fresh 52-week high of ₹1,856.50 on the BSE, while Mobikwik rose 6% to ₹214. In contrast, Pine Labs declined 6% to ₹182 per share.MDR rate on UPI paymentsThe National Payments Corporation of India (NPCI), which operates UPI, announced that a 0.4% MDR would apply to person-to-merchant UPI payments above ₹2,000 from October 15. The charge will be capped at ₹300 for transactions of ₹75,000 or more.Transactions between individuals, including transfers among family and friends, will continue to remain free. Payments made to small vendors under the P2PM category will also not attract MDR charges.App providers are barred from adding platform fees, and banks have been told not to let merchants pass MDR costs to customers. A fifth of the new fee pool will fund small-merchant UPI expansion.Small merchants earning up to Rs 1 lakh a month via UPI QR codes stay fully exempt - a carve-out the government says shields 96 per cent of merchant transactions from any new charge.MDR to support revenue model Analysts said the introduction of MDR creates a more predictable revenue framework for digital payment companies. Jefferies noted that the levy was higher than the expected 25 basis points and could expand the industry’s revenue potential.According to reports, Paytm could generate UPI MDR revenue of ₹11.2 billion by FY28, while Pine Labs could earn ₹1.55 billion under conservative assumptions.Ending nearly six years of fully free UPI payments, the government on Tuesday introduced a 0.4 per cent fee on transfers worth more than Rs 2,000 made to merchants through the platform from October 15, while explicitly ring-fencing everyday person-to-person transactions as well as small payments from any charge.

Paytm, MobiKwik and Pine Labs are likely to remain in focus after the government announced MDR on select UPI transactions above Rs 2,000. From October 15, merchants will pay a 0.4% fee on eligible P2M UPI transactions, capped at Rs 300 for payments of Rs 75,000 or more.