Paytm, MobiKwik rally as UPI fees open new revenue stream
What's the story
Shares of One97 Communications (Paytm's parent company), CMS Info Systems, One Mobikwik, Yes Bank, and others have surged in trade today. The spike comes after India announced its first merchant discount rate (MDR) framework for Unified Payments Interface (UPI) from October 15, 2026. The introduction of MDR on select UPI payments is seen as a major monetization opportunity for banks and payment companies.
Market reaction
What is the UPI-MDR framework?
The National Payments Corporation of India (NPCI) has set a 0.4% MDR on person-to-merchant UPI transactions over ₹2,000 from October 15.
The charge will be capped at ₹300 for payments of ₹75,000 and above.
Following the announcement, Paytm's shares jumped as much as 7.25% to ₹1,855.50 apiece in early trade today.
CMS Info Systems' shares rose up to 7.22% to ₹239 apiece and One Mobikwik's shares rose by 6.54% to ₹213.99 per share, respectively, in early trade today.
Financial forecast
Banks, payment players to benefit from new framework
UBS estimates an annual revenue pool of ₹10,000-15,000 crore for banks and payment players. It expects banks to retain about 60-70% of this revenue while the rest will go to payment companies.
Morgan Stanley has even higher expectations for fintechs' earnings impact. It predicts Paytm's EBITDA estimates could rise by 38-48% for FY28/FY29 while Pine Labs' adjusted EBITDA could increase by 24-29%.
Revenue projections
Goldman Sachs and JPMorgan's projections for industry revenue pool
Goldman Sachs estimates a much larger ₹20,600 crore potential industry revenue pool, assuming half of the overall UPI transaction value would be subject to the full 40-basis-point MDR.
JPMorgan estimates a maximum pool of around ₹17,000 crore including some ₹11,700 crore for issuing and acquiring banks, which is about 2.1% of FY26 net profit for listed commercial banks.
Market analysis
Citi's analysis of ecosystem revenue distribution
Citi estimates an annual ecosystem revenue of ₹16,000-17,000 crore, with banks getting 60% of that, UPI app providers 25%, and non-bank payment aggregators 15%.
It sees YES Bank as a key beneficiary due to its UPI-linked volumes.
The new fee structure is expected to benefit Paytm and Pine Labs while Emkay Global Research has raised target prices for their stocks to ₹2,400 and ₹230, respectively.