{"id":1990,"date":"2026-09-16T08:32:52","date_gmt":"2026-09-16T08:32:52","guid":{"rendered":"https:\/\/newsraise.com\/in\/2026\/09\/16\/india-upi-merchant-fee-boosts-paytm-banks\/"},"modified":"2026-09-16T08:32:52","modified_gmt":"2026-09-16T08:32:52","slug":"india-upi-merchant-fee-boosts-paytm-banks","status":"publish","type":"post","link":"https:\/\/newsraise.com\/in\/2026\/09\/16\/india-upi-merchant-fee-boosts-paytm-banks\/","title":{"rendered":"India&#8217;s new 0.4% UPI merchant fee lifts Paytm, banks as shares climb"},"content":{"rendered":"\n<!-- Quick Adsense WordPress Plugin: http:\/\/quickadsense.com\/ -->\n<div class=\"9fece8afa224fd09e54b043d0febfb58\" data-index=\"1\" style=\"float: none; margin:10px 0 10px 0; text-align:center;\">\n<script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script>\r\n<!-- NR ATF -->\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block\"\r\n     data-ad-client=\"ca-pub-8898941184964366\"\r\n     data-ad-slot=\"4839033563\"\r\n     data-ad-format=\"auto\"\r\n     data-full-width-responsive=\"true\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script>\n<\/div>\n<p>The Indian finance ministry announced on Tuesday that a 0.4% merchant discount rate (MDR) will be levied on Unified Payments Interface (UPI) transactions to merchants that exceed \u20b92,000, starting 15\u202fOctober. The policy explicitly excludes everyday person\u2011to\u2011person (P2P) transfers and small\u2011value payments, which will remain free of charge.<\/p>\n<h2>Details of the new merchant discount rate<\/h2>\n<p>According to the ministry\u2019s statement, the charge applies solely to person\u2011to\u2011merchant (P2M) payments above the \u20b92,000 threshold. The fee is capped at \u20b9300 for transactions of \u20b975,000 or more. Essential services such as railways, telecom, insurance, fuel and agricultural inputs will face a flat fee of \u20b95 per transaction above \u20b92,000, a measure intended to keep costs predictable for critical sectors that together represent about 17% of transaction volume but roughly 46% of value.<\/p>\n<p>Government\u2011related utilities \u2013 electricity, water, piped gas \u2013 and educational fee collections (school tuition and university fees) above \u20b92,000 will also be subject to the flat\u2011fee structure. Payments into mutual funds, securities and through stock\u2011brokers will attract a lighter 0.02% MDR, also capped at \u20b9300, to keep investing costs low and encourage retail participation.<\/p>\n<p>Person\u2011to\u2011person transfers, which account for 37% of UPI\u2019s transaction volume and 70% of its value, will continue to be charge\u2011free regardless of amount. Small\u2011value P2M transactions up to \u20b92,000 \u2013 which the ministry says constitute more than 95% of total P2M volume \u2013 are also exempt.<\/p>\n<h2>Market reaction and stock movements<\/h2>\n<p>Following the announcement, shares of several payment\u2011technology firms and banks rose on Wednesday, 16\u202fSeptember. One\u202f97 Communications, the parent company of Paytm, climbed 1.24% to \u20b91,751.40 on the National Stock Exchange, touching a 52\u2011week high of \u20b91,855.50 and up 7.25% from the prior close of \u20b91,730.<\/p>\n<p>Banking stocks also posted gains. YES Bank\u2019s shares surged 3.34% to \u20b923.84, while State Bank of India advanced just over 1% to \u20b9979. Bank of Baroda added a modest 0.24% increase, trading at \u20b9233.25.<\/p>\n<p>Other payment players such as Mobikwik and Pine Labs were reported to be trading in the green, reflecting investor optimism that the new MDR will open a fresh revenue stream for entities that process large merchant payments.<\/p>\n<h2>Analyst projections and revenue outlook<\/h2>\n<p>Market analysts have broadly welcomed the re\u2011introduction of an MDR on eligible UPI transactions, describing it as a long\u2011awaited monetisation event for the payments ecosystem. Citi estimates that the framework could generate an incremental revenue pool of roughly \u20b916,000\u2011\u20b917,000\u202fcrore per year. The bank expects about 60% of that amount to flow to banks, 25% to UPI app providers and the remaining 15% to non\u2011bank payment aggregators.<\/p>\n<p>Citi highlights YES Bank as a prime beneficiary, given its sizable share of UPI beneficiary volumes. The firm projects a potential boost of 5\u201110% to the bank\u2019s pre\u2011provision operating profit (PPOP) and 6\u201112% to profit before tax (PBT). Bank of Baroda, Punjab National Bank and IndusInd Bank could see around a 2% impact on PBT, while Axis Bank, SBI and Federal Bank might experience a 1\u20112% uplift.<\/p>\n<p>Goldman Sachs sees a material earnings upgrade for payment companies, estimating a 40\u201170% upside to its FY28 EBITDA forecasts for Paytm. The investment bank notes that the 40\u2011basis\u2011point MDR is higher than the 20\u201130\u202fbps it previously modeled. Based on NPCI data, Goldman calculates that roughly half of overall UPI transaction value could fall under the 40\u2011bps category, creating an industry\u2011wide revenue pool of about \u20b920,600\u202fcrore. In a high\u2011end scenario, the bank projects an incremental \u20b91,400\u202fcrore EBITDA for Paytm in FY28.<\/p>\n<p>JPMorgan also views the move positively, estimating the total maximum revenue pool at around \u20b917,000\u202fcrore. Of that, the firm expects roughly \u20b911,700\u202fcrore to accrue to banks via issuer and acquirer channels \u2013 an amount equivalent to about 2.1% of FY26 net profit for listed commercial banks. JPMorgan further allocates about \u20b91,700\u202fcrore to payer platform service providers (PSPs) and \u20b93,400\u202fcrore to third\u2011party application providers (TPAPs). The brokerage notes that mid\u2011tier banks such as YES Bank stand to gain disproportionately because of their deeper exposure to the UPI ecosystem.<\/p>\n<p>Overall, the consensus among analysts is that the new MDR framework will create a sizable, recurring revenue source for both banks and payment\u2011service providers, while preserving the zero\u2011cost nature of small\u2011value and peer\u2011to\u2011peer transactions that have driven UPI\u2019s rapid adoption.<\/p>\n<p>In its statement, the finance ministry emphasized that the MDR is a charge within the merchant payment ecosystem and not a cost borne by end\u2011users. It reiterated that customers will continue to enjoy unlimited free usage of UPI with no monthly quotas, volume caps or tiered limits.<\/p>\n<p>The introduction of the fee comes as the Indian government seeks to balance revenue generation with the goal of keeping digital payments affordable for the masses. By targeting higher\u2011value merchant transactions and shielding low\u2011value and person\u2011to\u2011person payments, policymakers aim to protect the inclusive nature of UPI while unlocking new earnings potential for banks and fintech firms alike.<\/p>\n\n<div style=\"font-size: 0px; height: 0px; line-height: 0px; margin: 0; padding: 0; clear: both;\"><\/div>","protected":false},"excerpt":{"rendered":"<p>A 0.4% charge on merchant UPI payments over \u20b92,000, effective Oct. 15, spurred gains in payment firms and banks, while keeping person\u2011to\u2011person transfers free.<\/p>\n","protected":false},"author":4,"featured_media":1991,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[299],"tags":[2069,216,2067,2068,305],"class_list":["post-1990","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-banking","tag-india","tag-mdr","tag-paytm","tag-upi","entry"],"_links":{"self":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/posts\/1990","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/comments?post=1990"}],"version-history":[{"count":0,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/posts\/1990\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/media\/1991"}],"wp:attachment":[{"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/media?parent=1990"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/categories?post=1990"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsraise.com\/in\/wp-json\/wp\/v2\/tags?post=1990"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}