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— Paytm’s response to NPCI’s RuPay UPI fee cut
The National Payments Corporation of India (NPCI) will lower third-party app provider (TPAP) and Payer PSP (payment service provider) fees for RuPay credit card transactions made through UPI, effective April 1, 2026, according to a regulatory filing by Paytm.
What are the revisions? Under the new structure, the TPAP fee for consumer payments through RuPay credit cards on UPI has been reduced from 8 basis points to 6 basis points for the non-industry category and from 4 basis points to 3 basis points for the industry category.
The TPAP fee is a small component of the Merchant Discount Rate (MDR) and is specifically paid to consumer-facing UPI apps—such as Google Pay, PhonePe, and Paytm—for processing digital payments.
What remains unchanged? The revision does not apply to the small offline merchants category, where the transaction amount is lower than Rs 2,000, as well as EMI transactions, Autopay mandates and Reserve Pay, where the existing fee structure will continue.
Wider Industry Implications
1. How will this affect Paytm? These changes apply to all domestic transactions made via RuPay credit cards on UPI and will affect the revenue consumer payment apps earn from processing them. Paytm also said that the revised fee structure will lower its consumer UPI app revenue.
However, the fintech firm noted that the revised fee structure will have a minimal impact on its overall financial performance, as a vast majority of its payment revenue comes from merchant transactions. Paytm claims that the payment processing margin for its overall payments business sits “comfortably above 4 basis points.” It said that the fee cut will not impact its merchant MDR, as it is priced by the company for merchants it acquires.
Additionally, the company said it continues to see an uptick in payment processing margins amid growing demand for higher-margin products such as Paytm Postpaid, EMI, and RuPay Credit Card on UPI, where it earns MDR from merchants.
Paytm generated a revenue of Rs 1,192 crore from payment services in the quarter ended December 2025 (Q3 FY26), up 19% from Rs 1,003 crore in the year-ago quarter.
2. Google Pay and PhonePe to profit from revised fee structure
“This fee cut slashes per-transaction costs in the high volume RuPay-on-UPI segment, directly improving margins for PhonePe and Google. Their massive consumer market share means even normal savings will multiply across billions of transactions, paving the path to breakeven, unlike merchant-heavy models of Paytm where MDR revenue remains unchanged,” Mohit Sahney, Co-Founder of non-banking finance company (NBFC) Finova Capital, told MediaNama.
IPO-bound PhonePe remains the market leader in the UPI space. According to NPCI data, the company processed 9.91 billion UPI transactions worth Rs 13.77 lakh crore in January 2026. This translates to a market share of 45.7%. Meanwhile, Google Pay holds a 33% market share, while Paytm lags at 7.6%.
3. How will the revised fee structure impact MobiKwik?
The NPCI’s TPAP fee cut from 8 to 6 basis points for non-industry RuPay credit card transactions on UPI lowers per-transaction revenue for consumer apps like MobiKwik, according to Sahney. He clarified that this reduction is minor and will not significantly affect the incentives these apps provide to promote usage.
Elaborating on this, Sahney said, “Banks seek RuPay adoption to grow credit issuance and transaction volumes, often partnering with apps via incentives, which aligns with MobiKwik’s model of offering low-fee cards and UPI integration. Apps view RuPay as a revenue diversifier (e.g., via cashback-funded acquisition), so lower TPAP fees enhance their margins without curbing marketing.”
MediaNama’s queries sent to MobiKwik co-founders Bipin Preet Singh and Upasana Taku did not elicit any response as of the time of publication.
During the Q3 FY26 earnings call, Taku said the company planned to sharpen its focus on the merchant payments category, especially in Tier II and III markets where larger fintech players have not fully penetrated.
According to Finova Capital’s Sahney, the NPCI’s latest move is also likely to benefit payment aggregators such as Razorpay and Pine Labs, as it essentially lowers the cost of moving money through the UPI network. Most aggregators are more likely to keep the extra money rather than lower the fees they charge businesses, because margins are already low, he said.
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