Paytm, MobiKwik shares fall over 2% as govt notifies UPI fee on transactions above ₹2,000
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Shares of One97 Communications Ltd, the parent company of Paytm, and its peer MobiKwik witnessed selling pressure on Tuesday, in an otherwise muted broader market. The sell-off was triggered after the government notified amendments to the Payments and Settlement Systems Act, paving the way for charges on UPI transactions above ₹2,000.
Weighed down by the development, Paytm shares fell as much as 2.42% to ₹1,762.30 on the BSE, after opening higher at ₹1,832.85. At the time of reporting, the fintech heavyweight was down 2.09% at ₹1,768.55, with a market capitalisation of ₹1.13 lakh crore.
On the other hand, MobiKwik also remained under pressure, declining 1.53% to ₹206. The company’s market capitalisation declined to ₹1,624.94 crore.
At ₹1,768, Paytm shares were up around 87% from their 52-week low of ₹947.10 and were close to their 52-week high of ₹1,832.85.
MobiKwik, meanwhile, remained well below its 52-week high of ₹325.70. At ₹206.95, the stock was down around 36% from its peak but remained above its 52-week low of ₹151.95.
What fuelled sell-off in fintech stocks?
The Ministry of Finance, through a gazette notification, specified UPI transactions up to ₹2,000 as an electronic mode of payment on which banks or system providers cannot impose any direct or indirect charges on the person making or receiving the payment.
The notification effectively leaves scope for charges on UPI transactions above ₹2,000, potentially paving the way for the reintroduction of merchant discount rate (MDR) on higher-value transactions.
MDR is a fee paid by a merchant to a bank or payment service provider for processing digital payments. The quantum of charges on UPI transactions above ₹2,000 is expected to be decided by the National Payments Corporation of India (NPCI).
For fintech companies such as Paytm and MobiKwik, the development could have implications for the economics of UPI payments, particularly as the companies seek to scale their payments businesses and monetise their user base.
At present, payment service providers largely rely on lending, merchant subscriptions, financial services and device rentals to monetise their platforms, as UPI transactions do not generate MDR income.
The UPI ecosystem is dominated by PhonePe and Google Pay, which together account for more than 80% of transaction volumes, while Paytm holds a market share of around 8%.
The government’s notification comes at a time when UPI has become the dominant mode of digital payments in India, with the zero-MDR framework for UPI transactions having limited direct monetisation opportunities for payment service providers.
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