Pine Labs’ stock surged 16.9%, Mobikwik gained over 8%, AvenuesAI jumped 6.1%, and Paytm’s stock gained 3.9% after reports suggesting that MDR fees on UPI transactions could soon be notified
The proposal could unlock a revenue stream of around ₹5,000-10,000 Cr for payments platforms like the four aforementioned companies, per an earlier research note by Jefferies
MDR fees are likely to be set at around 40 bps of the transaction value for P2M UPI transactions, with third-party app providers receiving roughly 12 bps
Pine Labs’ stock surged the most, jumping 16.9% to close the day at ₹202.35 on the BSE. Mobikwik climbed just over 8% to close at ₹209.80, while AvenuesAI jumped 6.1% to ₹16.31.
Meanwhile, shares of Paytm ended today’s trading session 3.9% higher at ₹1,806.25. The stock jumped as much as 5.2% during intraday trade to touch a fresh all-time high of ₹1,829.50.
The rally came after reports earlier in the day suggested that MDR fees on UPI payments are likely to be set at around 40 basis points (bps), or 0.4%, of the transaction value.
This comes around a month after the Centre amended the Payment and Settlement Systems Act (PSSA), 2007, to remove a blanket prohibition barring banks and system providers from charging fees on UPI payments.
MDR is likely to be charged on P2M transactions only and exclude P2P transactions, with a turnover-based threshold to ensure that only merchants with an annual turnover of around ₹1 Cr-₹1.5 Cr or more. There may be differential fees for businesses across sectors, as was earlier reported.
Third-party application providers (TPAPs) – UPI apps – would receive roughly 30% of the MDR, or 12 bps of the transaction value, as per an Economic Times report earlier today.
The proposal would unlock a revenue stream of around ₹5,000-10,000 Cr for payments platforms like the four aforementioned companies, brokerage Jefferies had said earlier in a research note.
It must be noted that the brokerage firm had estimated a slightly lower MDR of 15-30 bps on transactions above ₹2,000 in its calculations. “Assuming 25% CAGR in value of P2M over FY26-28, we estimate the revenue pool could be about ₹5,000-10,000 Cr in FY28 (estimated),” said Jefferies.
As a result, Paytm’s FY28 EBITDA and profit could grow around 15-35% while Pine Labs’ FY28 EBIT and profit could jump 9-23% in this scenario, per the brokerage’s estimates.
Another brokerage, Bernstein, had previously projected that Paytm could add ₹1,320 Cr to its EBITDA in the case of 35 bps MDR on a subset of UPI transactions. “We estimate MDR will apply to~50% of transaction value and that Paytm can realise ~3-4bps of incremental net payments margin, translating into ₹2,200 Cr of incremental EBITDA by FY30 (estimated),” it noted.
However, Jefferies had raised a question around slippage between the notified MDR rate and the earned take-rate in the event that competition to onboard merchants intensified among payments platforms.