One 97 Communications (Paytm) will start earning revenue from merchant UPI transactions above ₹2,000. Under new NPCI guidelines effective October 15, 2026, merchants will face an MDR of up to 0.4%, while consumer payments remain free. This marks a significant shift in Paytm's payments monetization strategy.
Paytm Eyes New Revenue Streams with NPCI UPI MDR Shift
- New MDR up to 0.4% on UPI P2M transactions exceeding ₹2,000.
- Effective date for implementation is October 15, 2026.
Reader Takeaway: New merchant-side charges allow Paytm to monetize UPI volumes while maintaining free service for retail customers.
What just happened
The National Payments Corporation of India (NPCI) has issued a circular introducing a Merchant Discount Rate (MDR) for UPI Person-to-Merchant (P2M) transactions. Starting October 15, 2026, transactions exceeding ₹2,000 will attract an MDR of up to 0.4%. One 97 Communications, which operates the Paytm brand, has confirmed this development to the stock exchanges.
Why this matters
This regulatory update addresses a long-standing challenge in the digital payments sector where high-volume UPI transactions often lacked a direct monetization path for payment service providers. By introducing a charge on the merchant side, the regulator provides a structural revenue opportunity for Paytm. Because the MDR applies only to merchants and not consumers, the user experience is expected to remain unchanged.
What changes now
Paytm’s business model for merchant payments shifts from a zero-revenue structure for specific segments to a fee-based model for transactions above the ₹2,000 threshold. The financial contribution will depend on the total volume of these higher-value transactions processed on the platform.
What to track next
Investors should monitor upcoming quarterly results for guidance on the expected revenue uplift from this change. Future filings will likely provide more clarity on how Paytm intends to roll out this fee structure to its existing merchant base.