Fintech Stocks Rally on Report of 40 Basis Point MDR on UPI
Shares of Indian fintech companies, including Paytm, Pine Labs, and Mobikwik, experienced a notable increase today following reports suggesting the potential introduction of Merchant Discount Rate (MDR) fees on UPI transactions.
Stocks of Indian fintech firms such as Paytm, Pine Labs, Mobikwik, and AvenuesAI saw significant gains today amidst reports indicating the potential introduction of a Merchant Discount Rate (MDR) on UPI transactions. The suggested MDR is reportedly set at around 40 basis points, or 0.4%, of the transaction value.
Pine Labs emerged as the top performer, with its stock surging 16.9%. Mobikwik saw an increase of over 8%, while AvenuesAI climbed 6.1%. Paytm's shares also rose nearly 4% during the trading session, reaching a fresh 52-week high.
The development follows an amendment to India's Payment and Settlement Systems Act (PSSA) that removed a previous prohibition on charging fees for UPI payments. However, the MDR is expected to apply only to business-to-consumer (P2M) transactions, excluding peer-to-peer (P2P) transfers. Additionally, it is likely to be implemented for merchants with an annual turnover of approximately ₹1 crore to ₹1.5 crore or more.
Industry analysts suggest that this new MDR structure could unlock substantial new revenue streams for payment platforms like Paytm and Pine Labs. Some projections indicate this could lead to significant growth in future earnings and profits for these companies, although competitive pressures among platforms might influence the final fee realization.