Digital payment stocks experienced steep losses on Thursday following reports that the implementation of the proposed Merchant Discount Rate (MDR) on specific UPI transactions might be pushed back from October 15 to January 1, 2027. This potential postponement created investor anxiety regarding when fintech companies might secure a fresh revenue stream.
One 97 Communications, the parent company of Paytm, plummeted by as much as 10%, whereas One MobiKwik shed more than 8%. Pine Labs likewise experienced a downward trend throughout the trading day. The drop in Paytm’s share price temporarily reduced its market capitalization under Rs. 1 lakh crore.
UPI MDR Rollout Faces Delay
Previously, the National Payments Corporation of India (NPCI) suggested an MDR of 0.4% applicable to person-to-merchant UPI transactions exceeding Rs. 2,000, with eligible transactions subject to a maximum cap of Rs. 300. Transactions falling below this amount would continue to stay exempt.
Although the updated framework was initially set to launch on October 15, various merchant associations, fintech companies, and industry stakeholders requested additional preparation time for the shift. The NPCI is anticipated to finalize its decision following consultations with the finance ministry.
Festive Season Prompts Rethink
This prospective postponement arrives right ahead of India’s vital festive shopping season. Merchant groups contended that rolling out MDR during this peak period could elevate business expenses precisely when transaction volumes surge.
Extending the zero-MDR framework through January would maintain current conditions throughout the festive rush. Furthermore, indications point to officials evaluating broader exemptions for smaller enterprises, which could encompass companies generating an annual turnover up to Rs 40 lakh.
Discussions regarding the proposed fee model are ongoing as various parties push for definitive guidelines concerning transaction classifications alongside how MDR revenues will be shared among payment aggregators, banks, and other ecosystem players.
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