Paytm Hits 10% Lower Circuit as UPI MDR Rollout May Slip to January; MobiKwik, Pine Labs Also Slide

Listed fintech companies took a sharp hit in early trade on Thursday, October 8, after reports suggested that the government's new merchant discount rate (MDR) on larger UPI payments may not start on schedule. Shares of One 97 Communications, the parent of Paytm, fell the maximum permitted 10% to about Rs 1,560 on the BSE, locking in a lower circuit within the first 15 minutes of trade.

The selling spread across the payments pack. One MobiKwik Systems dropped close to 8% to around Rs 236, while Pine Labs slipped roughly 4% to about Rs 170.

What triggered the sell-off

In September, the government announced that a 0.4% MDR would apply to eligible person-to-merchant UPI transactions above Rs 2,000, with the fee capped at Rs 300 for payments of Rs 75,000 or more. Small merchants and person-to-person transfers are exempt, and consumers do not pay the charge. The framework was set to take effect on October 15, 2026.

Reports on Thursday morning indicated that the start date could be moved to January 1, 2027. The reasoning is to give merchants, banks and payment companies more time to adjust, and to avoid introducing a new charge in the middle of the festive shopping season. No final decision has been announced, and the reports suggest the structure of the fee itself would stay the same.

Why a delay matters so much to these stocks

For more than a decade, UPI has been free for merchants, which left payment apps handling enormous volumes without earning much from them. The MDR was the first meaningful chance to change that. When the framework was announced, Paytm told the exchanges that it would generate revenue from many merchant payments that had earlier been free. MobiKwik said it expected to earn both as a consumer-facing UPI app and as a merchant acquirer.

Analysts moved quickly to build the new revenue into their models. Jefferies, for one, had noted that a 40 basis point fee was higher than the 25 basis points it had expected, and raised its earnings estimates for Paytm accordingly. That optimism showed up in the share price: Paytm had nearly doubled from its 52-week low of about Rs 947 in March to a high of roughly Rs 1,856 in mid-September.

A three-month deferral does not change the long-term math, but it does remove a full festive quarter of potential income from the near-term picture. When a stock has already priced in a catalyst, even a delay can trigger a steep correction. Thursday's fall left Paytm about 16% below its September peak.

MobiKwik's drop also reflected profit-taking, since the stock had climbed about 22% over the previous three sessions on MDR optimism.

Weak backdrop added to the pressure

The fintech sell-off came on a difficult morning for Indian equities overall. The Sensex was down roughly 370 points at about 72,265 around 10 am, a day after the Reserve Bank of India raised its repo rate by 25 basis points to 5.50%, its first hike since February 2023. With Brent crude trading above $102 a barrel, investors were reluctant to hold high-valuation stocks.

What to watch

The key trigger now is official confirmation of the start date, which could come from the government or the National Payments Corporation of India before October 15. If the original date holds, some of Thursday's losses could reverse. If January 1 is confirmed, analysts are likely to shift their earnings estimates by a quarter, and the stocks may stay volatile until the fee actually takes effect.

For retail investors, the episode shows how much of a stock's recent run can depend on a single policy date.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.