Paytm, Pine Labs, MobiKwik Fall, Rebound As UPI MDR Rollout Deferred ‘Immediately After’ Diwali

Mumbai, October 13: Shares of Paytm parent One 97 Communications, Pine Labs and One MobiKwik Systems fell before recovering as the National Payments Corporation of India (NPCI) postponed the rollout of merchant discount rates (MDR) on select Unified Payments Interface (UPI) transactions immediately after Diwali.  

Shares of Paytm parent One 97 Communications fell as much as 7% on Tuesday, while Pine Labs declined 4.8% and One MobiKwik Systems 4% before rebounding. 

The decision pushed back the planned October 15 implementation, delaying the potential revenue benefits for digital payments companies.  

UPI MDR Rollout Deferred After Diwali 

NPCI said the UPI and Services Steering Committee had decided to defer the implementation of the proposed charges, taking into account the ongoing festive season. Diwali falls on November 8 this year, and the revised date for introducing the charges has not yet been announced. 

Paytm plunged on news of the deferred rollout of UPI MDR. Source: NSE 

The proposed framework envisages a merchant discount rate of 0.4% on eligible person-to-merchant (P2M) UPI transactions exceeding Rs 2,000. The fee would be charged to merchants for processing payments, rather than directly to consumers. The postponement gives payment companies and merchants additional time to prepare for the revised fee structure.  

The planned charges were expected to introduce a transaction-linked revenue stream into an ecosystem that has operated largely on a zero-MDR basis for several years. However, merchant associations, fintech firms and payment service providers had sought a delay, citing implementation challenges and concerns about adding costs during the peak festive shopping period. 

Why Paytm, Pine Labs And MobiKwik Shares Are Falling 

The postponement could delay the incremental revenue that companies such as Paytm, Pine Labs and MobiKwik had anticipated from eligible UPI transactions. The eventual financial impact will depend on the final implementation timeline, the volume of transactions covered and the share of the fee retained by each participant in the payments ecosystem. 

For Paytm, which operates a large merchant payments business, MDR charges could provide an additional monetisation opportunity. Pine Labs, which provides merchant commerce and payment technology solutions, could also benefit from charges on eligible transactions processed through its network. MobiKwik, meanwhile, operates digital payments and financial services businesses. 

The proposed framework does not mean that every UPI transaction will attract a fee. The charges are intended for eligible merchant transactions above the specified threshold, while person-to-person transfers remain outside the proposed MDR structure. 

Investors Await Clarity On Implementation 

The market reaction reflects uncertainty over when the new revenue framework will take effect, rather than a cancellation of the proposed charges. Investors will watch for NPCI’s revised timeline and further details on the applicability of the MDR framework. 

The delay also highlights the challenge of balancing the commercial sustainability of digital payments with the need to keep transactions affordable for merchants and consumers during a period of elevated spending. 

Source:

• Public information