Paytm, SBI, YES, ICICI Bank shares rally after govt introduces 0.4% MDR on merchant UPI payments - Upstox

**Paytm, SBI, YES Bank, ICICI Bank Shares Jump After Government Sets 0.4% MDR on Merchant UPI Payments**

New Delhi – The Union government announced on Monday that a 0.4 percent merchant discount rate (MDR) will be levied on all Unified Payments Interface (UPI) transactions processed by merchants, ending the zero‑fee regime that has been in place since the platform’s launch in 2016. The policy, slated to take effect from October 1, is aimed at creating a sustainable revenue stream for the payments ecosystem and narrowing the fiscal gap between the Reserve Bank of India’s digital‑payment infrastructure and the private sector that operates on it. While the government says the modest rate will not dent the competitive advantage of UPI, industry observers note that it marks the first direct cost imposed on merchants for using the nation’s flagship instant‑payment system.

The announcement sent a wave of optimism through the equity markets of the digital‑payments and banking sectors. According to Upstox data, shares of Paytm (One 97 Communications Ltd.) surged nearly 5 percent, while State Bank of India, YES Bank and ICICI Bank each posted gains ranging from 3 percent to 4 percent in early trading. Analysts at brokerage houses attribute the rally to expectations that a formalised fee structure will legitimize and expand merchant acceptance of UPI, boosting transaction volumes that ultimately benefit payment processors and banks. However, a separate Bloomberg report highlighted unease among Indian stockbrokers and retail merchants, many of whom fear the new charge could compress margins, deter small‑business adoption and shift consumer preference toward cash or alternative payment modes.

The policy has already attracted legal scrutiny. A petition filed in the Supreme Court contends that the 0.4 percent levy could disproportionately affect the “common man” by raising the cost of everyday purchases, a claim echoed in a Times of India article citing consumer‑rights groups. In response, a Ministry of Finance spokesperson, referenced by the Hindustan Times, dismissed suggestions of “external pressure” or foreign influence behind the move, insisting that the fee is a domestic policy decision intended to “build a robust, sustainable UPI ecosystem.” The court’s ruling is pending, leaving the industry and consumers in a holding pattern as the October implementation date approaches.