NPCI Reduces RuPay Credit Card UPI Fees; Paytm Reports Minimal Business Hit

Fee Revision Announced

The National Payments Corporation of India (NPCI) has issued a circular revising the Payer PSP and TPAP fees for RuPay Credit Card transactions on the Unified Payments Interface (UPI).
Effective April 1, 2026, fees for non-industry players will decrease from 8 basis points to 6 basis points. Industry players will see their rates reduced from 4 basis points to 3 basis points.
One 97 Communications, the parent company of Paytm, acknowledged the revision, stating that the overall financial impact on the company is immaterial. Paytm does anticipate a reduction in its consumer UPI app revenue due to this change.

Impact on UPI Revenue

This fee revision directly affects the revenue for consumer-focused UPI applications like Paytm, which earn fees from processing RuPay Credit Card transactions.
Although the reduction is small per transaction, it can add up significantly across millions of transactions, impacting profitability for payment processors and PSPs.
The NPCI's move aims to standardize and potentially reduce costs within the growing RuPay Credit Card on UPI system, encouraging broader use.

Paytm's Regulatory Context

Paytm, operated by One 97 Communications, has been facing a difficult regulatory period. In March 2024, the Reserve Bank of India (RBI) imposed significant restrictions on Paytm Payments Bank (PPBL) due to ongoing regulatory issues and compliance failures.
These restrictions have caused operational challenges for the Paytm app, affecting its core payment processing abilities and user confidence.
NPCI has been introducing and refining features such as UPI Lite and the RuPay Credit Card on UPI facility to improve the digital payments system.

Key Adjustments

• UPI apps serving consumers will receive lower fees for each RuPay Credit Card transaction.
• Paytm expects its consumer UPI app revenue to decrease.
• The company's merchant payment business and related revenue remain unaffected by this fee change.
• The April 1, 2026, effective date provides businesses time to adapt to the new fee structure.

Potential Risks

The main risk for One 97 Communications involves the ongoing impact of the RBI's restrictions on Paytm Payments Bank, which continues to affect its overall financial health and operational capacity.
Further regulatory changes or stricter compliance demands from NPCI or the RBI could create more uncertainty.
Although Paytm states the current fee impact is minimal, continued pressure on revenue streams could become significant if not balanced by growth in other business areas.

Competitor Landscape

PhonePe and Google Pay are the leading platforms in India's consumer UPI app market.
These platforms, like Paytm, depend on transaction fees for a large part of their revenue model, making them similarly exposed to these regulatory adjustments.
However, their diversified revenue streams, especially in merchant services and financial product distribution, may provide different levels of resilience among competitors.

Fee Details

• NPCI Payer PSP/TPAP Fee for RuPay Credit Card on UPI (Non-Industry): Reduced from 8 bps to 6 bps. (Effective April 1, 2026).
• NPCI Payer PSP/TPAP Fee for RuPay Credit Card on UPI (Industry): Reduced from 4 bps to 3 bps. (Effective April 1, 2026).

Future Outlook

• Monitor the actual implementation of the revised fees by payment platforms starting April 1, 2026.
• Observe any future guidance from One 97 Communications on its consumer payments segment performance.
• Track further regulatory announcements from NPCI or RBI concerning UPI transaction fees or digital payment systems.
• Assess how competitors like PhonePe and Google Pay respond to similar fee adjustments.
• Watch for developments regarding the resolution of issues at Paytm Payments Bank.