Paytm shares jump over 7% to hit 52-week high after UPI MDR charge; what investors should know

Online payments platform One 97 Communications or Paytm shares jumped more than 7% after the opening bell on Wednesday, September 16, as investors reacted to the latest MDR fee imposed by the National Payments Corporation of India (NPCI) on UPI payments of more than ₹2,000 made to merchants.

NSE data showed that Paytm shares surged 7.25% to touch an intraday and 52-week high of ₹1,855.50 apiece on Wednesday’s market, in comparison to ₹1,730 apiece at the previous equity market close.

Trading volumes surpassing 7 million equity shares across NSE and BSE combined triggered the high-volume gains on September 16. After touching the year-high level, the company’s stock retracted its gains as investors booked profits after the development.

As of the early market hours of 9:35 am (IST), Paytm stock was trading 0.75% higher at ₹1,743 apiece, in comparison to the previous stock market close, according to the exchange data.

After the NPCI circular, Paytm, in an official statement, said that this 0.4% MDR fee will generate additional revenue from the company’s merchant business.

“This will generate additional revenue from the merchant business for many of the payment transactions that were free earlier. As per the NPCI Circular, no charge is levied on customers for UPI payments, which shall continue to remain free of charge for them,” Paytm informed the stock exchanges.

Market experts predict that the UPI MDR charge is expected to provide a material earnings upgrade to the payment aggregators, as this new charge is viewed as a structurally positive and long-awaited monetisation event for the UPI-heavy banks and platforms.

What is MDR charge?

MDR, or Merchant Discount Rate, is a charge within the merchant payment ecosystem which is not added to customers making UPI payments to a merchant.

The National Payments Corporation of India (NPCI) on Tuesday evening, September 15, announced that a 0.4% fee will be imposed on UPI payments of more than ₹2,000 made to merchants, effective from October 15, 2026.

This means the new charge will apply only to person-to-merchant (P2M) transactions above ₹2,000, while everyday person-to-person (P2P) transactions and small payments to merchants will continue to remain free.

“Customers will not be required to pay any charge when making such payments through UPI,” said the Ministry of Finance in its official statement.

Who will pay the UPI fees?

While the merchants or the shops will be mandated to pay this 0.4% MDR on UPI transactions above ₹2,000, customers who will be paying these merchants will not be charged any fees under this new initiative.

“MDR is a charge within the merchant payment ecosystem. It is not a charge on customers making UPI payments,” said the Ministry of Finance in a statement.

The new guidelines also show that individuals using UPI platforms will continue to have “unlimited free usage” with no monthly quotas, volume restrictions or tiered caps on free UPI transactions.

The revenue generated from this newly imposed 0.4% MDR fee will not go to the government and will go directly to the companies which run the UPI payments chain in the country.

As per the official mandate, the merchant will pay this charge to the UPI payment platforms, much similar to the charges which are levied on credit card payments. However, experts suggest that whether or not these merchants decide to pass on the same to the customers remains a grey area.