The National Payments Council of India (NPCI), in a notification on Tuesday, stated there would be a 0.4% MDR on person-to-merchant (P2M) transactions above ₹2,000. Meanwhile, the P2P UPI remains free.
The MDR for transactions of ₹75,000 and above are capped at ₹300. Mutual funds, securities and stock broker payments MDR at 0.02% will be capped at ₹300 as well.
Small merchants receiving up to ₹1 lakh a month via UPI QR remain MDR free.
As much as 5% of the total MDR collections will go into a dedicated small merchant fund.
The railways, telecom, insurance, fuel and agriculture inputs MDR at ₹5.
Who gets the MDR
| Who gets the MDR | Break-up of MDR | 40 BPS MDR split explained |
| UPI Fund | 5% of rest | 2 basis points |
| Acquiring Bank | 30% | 15.2 basis points |
| TPAP*/App provider | 20% | 7.6 basis points |
| Power PSP | 10% | 3.8 basis points |
*TPAP stands for third-party application provider
Impact of MDR On UPI
JPMorgan
The brokerage has estimated a maximum revenue pool of ₹17,000 crore. This includes, ₹11,700 crore for the issuer and acquiring banks, ₹3,400 crore for TPAPs and ₹1,700 crore for Payer payment service providers (PSPSs).
Emkay
The brokerage has “buy” ratings on both stocks Paytm and Pine Labs
The brokerage estimates a revenue for ₹1,120 crore for Paytm for the financial year 2028.
It estimates the FY28 UPI MDR revenue of ₹1,550 crore from Pine Labs.
Emkay’s view is that UPI acquiring now carries a commercial revenue model that is contractual, recurring, and scales with value, in place of a discretionary annual subsidy. This will make the payment business structurally self-sustaining, making the business model much more resilient.
Emkay has raised its target prices on Paytm to ₹2,400 from its previous ₹1,700 and on Pine Labs to ₹320 from ₹190. This indicatesa an upside of 38.7% and 65.1% for Paytm and Pine Labs, respectively.
Goldman Sachs
The brokerage has a ₹20,600 crore revenue pool for the industry and incremental EBITDA of ₹1,400 crore in FY28 for Paytm. Click here to read more about Goldman Sachs’ views on Paytm.
Here’s a look at the overall brokerage views on Paytm and Pine Labs:
| Stock | Buy | Hold | Sell |
| Paytm | 18 | 6 | 0 |
| Pine Labs | 9 | 2 | 0 |
Stock reactions
Paytm shares surged 7.3% to hit an intraday high of ₹1,742.2 apiece on Tuesday just after market open. However, the stock later pared its gains and was trading 0.5% at ₹1,739.4 apiece. Meanwhile, Pine Labs shares were trading 3.2% lower at ₹187.64. Shares of Mobikwik are also off the opening highs, now trading 2.1% lower at ₹196.7.
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