Paytm shares jump over 7%; Pine Labs, One Mobikwik pare early gains
Ending nearly six years of fully free UPI, the government on Tuesday introduced a 0.4% fee on transfers worth more than Rs 2,000 made to merchants through the platform from October 15.
Shares of fintech firms such as Paytm rallied in Wednesday morning trade after the government introduced a 0.4% fee on transfers worth more than Rs 2,000 made to merchants through the UPI platform from October 15.
The stock of One97 Communications Ltd, which owns the Paytm brand, jumped 7.24% during intraday deals to reach the 52-week high of Rs 1,856.50 on the BSE.
Shares of One Mobikwik Systems Ltd climbed 5.96%, and Pine Labs edged higher by 2.68%. Shares of Pine Labs, however, pared early gains and traded 7% lower. One Mobikwik Systems also lost the winning momentum and quoted 2% lower.
Ending nearly six years of fully free UPI (Unified Payments Interface) payments, the government on Tuesday introduced a 0.4% fee on transfers worth more than Rs 2,000 made to merchants through the platform from October 15, while explicitly ring-fencing everyday person-to-person transactions and small payments from any charge.
"Customers will not be required to pay any charge when making such payments through UPI," the finance ministry said in a statement, adding, "MDR is a charge within the merchant payment ecosystem. It is not a charge on customers making UPI payments."
Also, individuals will continue to have "unlimited free usage, with no monthly quotas, volume restrictions or tiered caps on free UPI transactions", it said.
The carefully calibrated move signalled the end of an era for the world's largest real-time payments system even as the government tried to avoid alarming the hundreds of millions of daily users.
From October 15, a 0.4% merchant discount rate (MDR) will be levied on person-to-merchant (P2M) transactions above Rs 2,000 through UPI, capped at Rs 300 for payments of Rs 75,000 and above.
"This will generate additional revenue from the merchant business for many of the payment transactions that were free earlier," Paytm said in a regulatory filing late on Tuesday night.
As per a circular from National Payments Corporation of India, no charge is levied on customers for UPI payments, which will remain free of charge for them, it added.