Shares of major digital payment companies fell sharply on Thursday after reports that the rollout of the proposed Merchant Discount Rate (MDR) on select UPI transactions could be deferred from October 15 to January 1, 2027. The proposed delay raised concerns among investors about the timing of a new revenue stream for fintech firms.
Paytm parent One 97 Communications fell as much as 10%, while One MobiKwik dropped over 8%. Pine Labs also declined during the session. Paytm’s fall briefly pushed its market capitalisation below Rs. 1 lakh crore.
The National Payments Corporation of India (NPCI) had proposed an MDR of 0.4% on person-to-merchant UPI transactions above Rs. 2,000. The charge would be capped at Rs. 300 for eligible transactions. Transactions below the threshold would remain exempt.
The new framework was scheduled to take effect from October 15. However, merchant bodies, fintech companies and other stakeholders have sought more time to prepare for the transition. The NPCI is expected to take a decision after discussions with the finance ministry.
The proposed deferment comes just before India’s crucial festive shopping period. Merchant associations have argued that introducing MDR during the season could increase the cost of doing business when transaction volumes are expected to rise.
A delay until January would keep the existing zero-MDR regime in place through the festive period. Reports also suggest that authorities are examining wider exemptions for small businesses, including a possible exemption for firms with annual turnover of up to Rs 40 lakh.
The proposed fee structure also remains under discussion as stakeholders seek clarity on transaction categories and the distribution of MDR among banks, payment aggregators and other participants.
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