Paytm says new UPI MDR will generate additional revenue from merchant business

Paytm on Tuesday said the introduction of a Merchant Discount Rate (MDR) of up to 0.4% on select UPI Person-to-Merchant (P2M) transactions above ₹2,000 will generate additional revenue from its merchant business. The new charges, introduced by the National Payments Corporation of India (NPCI), will come into effect from October 15, 2026.

In an exchange filing, Paytm said NPCI has introduced an MDR of up to 0.4% on UPI P2M transactions exceeding ₹2,000. The company said the move would generate additional revenue from several merchant transactions that were previously processed without an MDR.

“This will generate additional revenue from the merchant business for many of the payment transactions that were free earlier,” Paytm said in its filing.

The company, however, clarified that the new MDR will not result in any charges for customers making UPI payments.

“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 said.

MUST READ: UPI MDR of 0.4% on transactions above ₹2,000 from October 15: What you need to know

What Paytm said about the NPCI circular

The circular, numbered NPCI/UPI/OC-No.237/2026-27, was issued on September 15, 2026. NPCI is authorised by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007, to operate retail payment systems in India, including UPI.

The MDR is applicable to eligible Person-to-Merchant (P2M) transactions. The framework does not impose a charge on customers using UPI.

The RBI has said the introduction of MDR on large-value UPI transactions is intended to support the long-term sustainability of the digital payments ecosystem. According to the central bank, an appropriate distribution of MDR across ecosystem participants can support continued investment in technology, payment infrastructure and merchant acceptance networks.

The RBI has also clarified that both Person-to-Person (P2P) and P2M UPI transactions will remain free for users. P2M transactions below ₹2,000 will also continue to remain free for merchants under the new framework.

For Paytm, the change could create a new revenue stream from eligible merchant payments once the framework becomes operational. The company said it will assess the impact after implementation.

“Further disclosure(s), if required,” will be made once the NPCI circular becomes effective and its impact is ascertained, Paytm said.

The new MDR structure therefore changes the revenue economics for certain high-value merchant transactions while keeping the customer-facing UPI payment experience free.\

ALSO READ: Are school, college fee payments exempt from standard UPI MDR? Here’s what parents need to note