Fintech stocks plunge up to 10% on UPI MDR deferral report; Paytm, MobiKwik, Pine Labs lead fall

Shares of fintech companies saw heavy selling pressure on Thursday, with Paytm, MobiKwik, Pine Labs and Manipal Payment and Identity Solutions shares falling up to 10% in intraday trade. The sell-off was triggered by reports that the government is considering deferring the proposed merchant discount rate (MDR) on select Unified Payments Interface (UPI) transactions.

Paytm parent One97 Communications was the biggest laggard, falling as much as 10% to ₹1,560.60 on the BSE. The stock also came under pressure after the Reserve Bank of India (RBI) removed Paytm Payments Bank Limited (PPBL) from the list of scheduled banks.

Shares of One MobiKwik Systems, Pine Labs and PB Fintech, the parent of Policybazaar, fell 4-5%, while Manipal Payment and Identity Solutions also declined up to 7%.

Fintech stocks corrected in sync with the broader market, with the Sensex and Nifty falling up to 1.7% as rising crude oil prices, the RBI’s hawkish policy shift and a weaker rupee weighed on investor sentiment.

Why are fintech stocks falling?

The selling pressure intensified after reports that the government is considering deferring the implementation of MDR on UPI transactions to January 1, 2027, from October 15. A final decision is expected in the next few days, according to media reports.

The proposed MDR is expected to apply to specified UPI person-to-merchant (P2M) transactions above ₹2,000. The deferment would keep UPI payments free for merchants through the festive season, with the charge potentially taking effect after Christmas. The rollout was earlier scheduled to begin on October 15, as per reports.

The proposal follows concerns from trader and industry associations that introducing MDR during the festive season could increase transaction costs for businesses.

For fintech companies, the proposed MDR could create a new revenue stream from select high-value UPI transactions. A delay, however, would push back the potential monetisation opportunity for the digital payments ecosystem.

Traders seek phased MDR rollout

Trader bodies have urged the government to adopt a phased approach to MDR implementation. They have proposed starting the charge at 0.20% in FY27 and increasing it by 0.05 percentage points annually until it reaches 0.40%.

The associations have also sought an increase in the proposed ₹1 lakh threshold to ₹5 lakh and exclusion of merchant-to-merchant transfers from the MDR framework.

Meanwhile, the Supreme Court on September 28 refused to grant an interim stay on the proposed MDR on specified UPI P2M transactions above ₹2,000. The court issued notices to the Centre, RBI and National Payments Corporation of India (NPCI), seeking their responses within four weeks.

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