Paytm, One MobiKwik Shares Surge Over 7%: How New UPI MDR Rules Sparked Early Market Rally

The shares of Paytm and MobiKwik gained over 7 per cent in early trade on Wednesday, September 16, after the government announced a new merchant discount (MDR) framework for select person-to-merchant UPI transactions. 

One Mobikwik System shares opened at Rs 213.99, up 6.5 per cent as compared to the last closing of Rs 200.86 on NSE. Meanwhile, One 97 Communications--the parent company of Paytm--shares started the session at Rs 1,830, significantly higher than the last closing of Rs 1,730. The fintech stock gained further to hit an early high at R 1,855.50, up 7.25 per cent from the last close. 

However, Paytm and Mobikwik shares erased their early gains amid selling pressure. Latest, Paytm shares were trading at Rs 1,752.50, up 1.30 per cent or Rs 22.50. Mobikwik stock was quoted at Rs 197.55, up 1.65 per cent or Rs 3.31.

0.4% MDR for Above Rs 2,000 (P2M) Payments 

Person-to-Merchant (P2M) transactions above Rs 2,000 will attract a 0.4 per cent Merchant Discount Rate (MDR). However, the fee will be shared among the facilitators, including banks and App providers, the government said on Tuesday.

"A nominal MDR of 0.4% will be levied on P2M transactions above Rs 2,000. This commission will be shared amongst the payment ecosystem partners, including banks and app providers," the Ministry of Finance said.

Additionally, for high-value transactions of Rs 75,000 and above, MDR will be capped at Rs 300 per transaction. Meanwhile, according to the government, person-to-person (P2P) transactions will not attract any charges irrespective of transaction value.

"For person-to-person (P2P) transactions, there will be no charges at all, irrespective of transaction value. P2P transactions constitute 37 per cent of the total UPI transactions in volume terms and 70 per cent in value terms," the ministry stated.

Capital market transactions

Payments made for mutual funds, securities, stock brokers, and dealers through UPI will attract a nominal MDR of 0.02 per cent, and the maximum MDR has been kept at Rs 300.

"This reduced rate encourages retail participation in formal financial markets," the government said. 

Will Small Vendors Pay MDR?

Small merchants--Street vendors and other small business owners-- who get up to Rs 1 lakh per month via UPI QR codes under the Person-to-Person-Merchant (P2PM) will not have to pay MDR. 

"Small merchants receiving up to Rs 1 lakh per month via UPI QR codes under the Person-to-Person-Merchant (P2PM) classification will continue to enjoy mandatory zero MDR for all transactions," the ministry informed. 

UPI App To Not Levy Platform Fee

The UPI app providers are explicitly prohibited from levying platform fees or hidden charges. Additionally, Banks have been advised to ensure that merchants do not pass MDR charges to customers for UPI payments.