Why Paytm and payment firms may benefit from new UPI fees

Paytm and other digital payment companies could get a new revenue stream after the National Payments Corporation of India introduced a Merchant Discount Rate, or MDR, on selected UPI merchant transactions above Rs 2,000.

Paytm rose as much as 7% on September 16 to Rs 1,856.50, while MobiKwik also gained as much as 6%.

What is the new UPI fee

From October 15, 2026, eligible person-to-merchant UPI payments above Rs 2,000 will attract an MDR of up to 0.4%, capped at Rs 300 per transaction.

UPI payments above Rs 2,000 will be affected, while person-to-person payments will remain free.

Small merchants receiving up to Rs 1 lakh a month through UPI QR will also remain outside the MDR framework.

For example, a Rs 10,000 eligible merchant payment would generate Rs 40 in MDR. A Rs 50,000 payment would generate Rs 200, while payments of Rs 75,000 or more would attract the maximum Rs 300.

How Paytm and payment firms benefit

The new MDR creates a transaction-linked revenue stream for the UPI ecosystem. Issuing banks will receive 40% of the MDR, merchant acquirers 30%, UPI apps 20% and bank partners of UPI apps 10%.

This means apps such as Paytm can earn from eligible merchant transactions that previously generated no MDR revenue.

Paytm said the framework could generate additional revenue from merchant payments. JM Financial estimates incremental revenue for Paytm of Rs 2.1 billion in FY27 and Rs 4.7 billion in FY28 under its assumptions.

Why the move matters for UPI

The new system could shift UPI merchant payments from a largely zero-MDR model towards a transaction-linked revenue model.

The new MDR framework could create a larger revenue pool for banks, payment apps and merchant acquiring businesses.

Estimates suggest the UPI ecosystem could generate up to Rs 16,000 crore in annual revenue, although the actual amount will depend on eligible transaction volumes and revenue distribution.

Paytm stock performance

Paytm's rally reflects market expectations that MDR could improve monetisation of its merchant payments business. Paytm rose sharply during the session, while MobiKwik also gained.

The actual financial impact will depend on eligible transaction volumes, merchant activity and the revenue received by each participant.

Paytm financial metrics

Financial metric	Value
Company	One 97 Communications Ltd
Market Cap	₹1,14,723 Cr.
Current Price	₹1,788
High / Low	₹1,855 / ₹931
Stock P/E	141
Book Value	₹250
Dividend Yield	0.00%
ROCE	4.96%
ROE	4.64%
Face Value	₹1.00

MobiKwik financial metrics

Financial metric	Value
Company	One Mobikwik Systems Ltd
Market Cap	₹1,566 Cr.
Current Price	₹199
High / Low	₹309 / ₹151
Stock P/E	533
Book Value	₹68.4
Dividend Yield	0.00%
ROCE	-2.25%
ROE	-8.28%
Face Value	₹2.00

What are the new UPI charges from October 15, 2026 A 0.4% Merchant Discount Rate will apply to eligible person to merchant UPI transactions above Rs 2,000 from October 15, 2026.

Will customers have to pay the new UPI charges No. The MDR is charged within the merchant payment ecosystem and is not directly charged to customers.

Is UPI payment above Rs 2,000 still free for customers Yes. Customers are not directly charged an MDR for making eligible UPI merchant payments.

Who will pay the 0.4% UPI MDR The charge applies to eligible merchants accepting person to merchant UPI payments above Rs 2,000.

Will UPI payments below Rs 2,000 remain free Yes. Merchant UPI transactions up to Rs 2,000 remain outside the new MDR framework.

Are UPI person to person payments still free Yes. Person to person UPI transfers between individuals remain free.

Why is Paytm benefiting from the new UPI charges Paytm can receive additional revenue from eligible merchant transactions that previously generated no MDR revenue.

Why did Paytm shares rise after the UPI MDR announcement The new MDR framework could create a recurring revenue stream for payment companies. Paytm shares rose as much as 7% on September 16, 2026.

Will MobiKwik benefit from the new UPI MDR MobiKwik could receive additional revenue from eligible UPI transactions under the new framework.

Will Pine Labs benefit from UPI MDR charges Pine Labs could benefit through its merchant acquiring and payment acceptance business as eligible UPI transactions begin generating MDR revenue.

How much is the UPI MDR rate The standard MDR is 0.4% for eligible person to merchant UPI transactions above Rs 2,000, subject to applicable caps and categories.

What is the maximum UPI MDR charge The MDR is capped at Rs 300 for standard eligible payments of Rs 75,000 or more.

How much MDR will be charged on a Rs 10,000 UPI payment At 0.4%, the MDR works out to Rs 40, subject to the applicable transaction category and framework.

How much MDR will be charged on a Rs 50,000 UPI payment At the standard 0.4% rate, the MDR works out to Rs 200, subject to applicable rules.

How much MDR will be charged on a Rs 1 lakh UPI payment The standard 0.4% calculation would be Rs 400, but the applicable cap limits the MDR to Rs 300.

Will small merchants have to pay UPI MDR Small merchants receiving up to Rs 1 lakh per month through UPI QR remain outside the standard MDR framework.

Which payment companies can benefit from UPI MDR Payment companies and merchant acquiring businesses such as Paytm, MobiKwik and Pine Labs could benefit from the new revenue pool.

How much revenue can payment companies make from UPI MDR The potential revenue depends on eligible transaction volumes, MDR rates and how the revenue is distributed across the UPI ecosystem.

Will the new UPI charges make Paytm more profitable The MDR creates a potential additional revenue stream for Paytm, but the actual earnings impact will depend on eligible transaction volumes and the revenue sharing arrangement.

When will the new UPI MDR charges start The new MDR framework is scheduled to take effect from October 15, 2026.