Shares of cash management companies and select ATM-related stocks experienced a significant surge in trading today following the government's announcement of a Merchant Discount Rate (MDR) on specific Unified Payments Interface (UPI) transactions. This new framework is set to impact person-to-merchant (P2M) transactions exceeding Rs 2,000.
New UPI MDR Framework Details
Under the recently unveiled framework, a 0.4% MDR will be applied to all person-to-merchant (P2M) UPI transactions where the transaction value surpasses Rs 2,000. This charge, which will be borne by merchants, is scheduled to come into effect from October 15, 2026. For larger transactions, specifically those of Rs 75,000 and above, the MDR will be capped at Rs 300, providing a ceiling for the fee.
The National Payments Corporation of India (NPCI) stated that this implementation timeline is designed to give acquiring banks, payment aggregators, fintech applications, and corporate accounting platforms sufficient time to update their software engines and billing systems in preparation for the change. Notably, person-to-person (P2P) transfers will remain free of charge.
Market Reacts to New Charges
The introduction of the UPI MDR sparked immediate positive reactions in the stock market for companies involved in cash management and ATM services. CMS Info Systems Ltd saw its shares jump by 7.37 percent, reaching a day's high of Rs 239 apiece. Similarly, Radiant Cash Management Services surged by 8.87 percent to Rs 39.28. While both stocks later pared some gains, they maintained a strong upward trend, with CMS Info Systems trading 4.1 percent higher at Rs 232.04 and Radiant Cash Management up 4.76 percent at Rs 37.60 on the BSE.
UPI's Dominance in India's Digital Payments
This policy change comes after approximately six years of free use for UPI transactions, regardless of their size or type. UPI has become a cornerstone of India's digital economy, demonstrating immense scale and adoption. Official data from August shows that UPI processed a staggering 2,450 crore transactions, amounting to a total value of Rs 29.82 lakh crore, serving over 55 crore users.
The government highlights UPI's commanding position, reporting an 84 percent share of India's digital payments by volume and a remarkable 49 percent share of global real-time payment volumes. The new MDR aims to generate additional revenue from the merchant business, a significant shift in the operational model of one of the world's largest digital payment ecosystems.