One 97 Communications, Paytm’s parent, estimates India’s planned fee on selected merchant UPI payments could lift its processing margin by 2.5 basis points, with the gain dependent on an unannounced launch date.
In its Oct. 26 earnings release, the company described the estimate as provisional and tied to the mix of transactions it currently handles. Paytm said its existing payment-processing margin was already above four basis points. It calculates that margin from MDR income on payment gross merchandise value after subtracting processing charges. The company said it could take two to three quarters after implementation for the effect to settle.
The start date remains open. The National Payments Corporation of India (NPCI) said the framework for selected person-to-merchant payments would take effect after Diwali, with a specific date to be announced later. EconoTimes previously covered the post-Diwali rollout and consumer exemption.
India’s Ministry of Finance says the standard MDR is 0.4% on eligible merchant payments above ₹2,000, capped at ₹300 for transactions of ₹75,000 or more. Person-to-person transfers, merchant payments up to ₹2,000 and transactions by specified small merchants are exempt. The ministry estimates about 4% of merchant transactions will be covered, leaving about 96% unaffected.
The ministry says MDR collections are shared among participants across the payment system, including banks and payment app providers. It has advised banks to ensure merchants do not pass the charge on to customers. The government said in August that subsidy reliance alone was not viable for UPI’s next growth phase, citing investment needs in infrastructure, cybersecurity and fraud prevention; it said UPI had been free for merchants and citizens since January 2020.
For the quarter ended Sept. 30, Paytm reported operating revenue of ₹26.48 billion, up 28% from a year earlier and 8% from the previous quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 90% year over year and 33% quarter over quarter to ₹2.7 billion. One 97 called MDR “a revenue and profit upside” for its business, while saying it was not the core of its model.
