Shares of fintech companies, including Paytm, showed growth during the trading session on Wednesday after the government introduced a 0.4% commission on transfers exceeding 2000 rupees made to sellers via the UPI platform starting October 15.
Shares of One97 Communications Ltd, which owns the Paytm brand, increased by 7.24% in intraday trading, reaching a 52-week high of 1856.50 rupees on the BSE exchange.
Shares of One Mobikwik Systems Ltd rose by 5.96%, and Pine Labs grew slightly by 2.68%. However, Pine Labs shares subsequently fell by 7%, correcting the initial rise. Similarly, One Mobikwik Systems lost momentum and dropped by 2%.
The government announced on Tuesday the end of nearly six years of completely free payments via UPI (Unified Payments Interface), introducing a 0.4% commission on transactions exceeding 2000 rupees sent to sellers through this system from October 15. It was clearly established that exceptions remain for daily interbank transfers and small payments, which will remain fee-free.
The Ministry of Finance stated in its announcement that 'customers will not have to pay any fees when making such payments through UPI,' adding that 'MDR is a seller ecosystem charge. It is not a charge for customers making payments through UPI.' It was also clarified that individuals will retain 'unlimited free use, without monthly quotas, volume restrictions, or multi-level limits on free UPI transactions.'
This carefully calculated step marked the end of an era for the world's largest real-time payment system, despite the government's attempts to avoid alarm among hundreds of millions of daily users. Starting October 15, a Merchant Discount Rate (MDR) of 0.4% will be charged on person-to-merchant (P2M) transactions exceeding 2000 rupees via UPI, with a limit of 300 rupees for payments of 75000 rupees and above.
Paytm reported in regulatory filings late Tuesday that 'this will bring additional revenue from seller businesses for many previously free payment transactions.' Furthermore, according to a circular from the National Payments Corporation of India, customers are not charged for UPI payments that remain free for them.