The catalyst

India is moving toward a legislative decision on whether large merchants may once again pay for UPI transactions. Reports on August 3 said proposed amendments to the Payment and Settlement Systems Act could open the door to Merchant Discount Rate (MDR), after the issue had been under discussion since July. The proposal is not a fee schedule or an enacted charge: the merchant threshold, rate and allocation of proceeds are still missing.News sourcesindianexpress.comThe Economic Times

The companies closest to the transaction therefore face different tests.News sourceOutlook Business

In brief

What matters

  • Policy stageThe proposal creates permission for a charge, not a realised revenue pool; passage, scope and pricing remain the next facts to establish.
  • Closest read-throughMobiKwik processes UPI and gateway transactions at scale, but its reported payment take rate was already falling, making monetisation more important than gross volume.
  • Acquiring economicsAvenuesAI’s CCAvenue sits between merchants and financial institutions, so the eventual test is whether a fee raises net take rate after routing, fraud and revenue-sharing costs.
  • BoundaryNPST supplies payment infrastructure to banks and fintechs, but its own strategy says domestic UPI economics are structurally limited; it is an infrastructure comparison, not a direct MDR beneficiary.

Company landscape

How the catalyst reaches listed businesses

Discovery question
Which Indian-listed companies directly participate in or are materially exposed to the business changes created by a proposed Merchant Discount Rate on large-merchant UPI transactions?
Nearer exposureBusinesses with a closer operating link
One Mobikwik Systems LtdMOBIKWIKCore direct UPI processor and merchant-payment platform
AvenuesAI LtdCCAVENUECore merchant-acquiring and payment-gateway operator
Fino Payments Bank LtdFINOPBCore bank-led payments and merchant-distribution operator
Adjacent and enablingBusinesses connected indirectly through the value chain
Network People Services Technologies LtdNPSTAdjacent payment-infrastructure supplier and boundary comparison

The proposed fee changes the question, not yet the earnings

The reported amendment would remove the statutory barrier that has kept UPI pricing at zero for the relevant transaction set. The reporting describes large merchants as the target, with person-to-person and small-merchant payments outside the proposal. The policy would be selective: a large retailer or platform could face a new cost while the wider habit remains unchanged.News sourcesindianexpress.comlivemint.com

The bridge is incomplete. Banks and payment providers could receive a fee, yet a processor may share it with banks, networks or platforms. Merchants could shift payment mix or renegotiate terms. Until the bill specifies payer and recipient, this is bargaining power rather than a forecastable profit line.News sourcesThe Economic TimesBusiness Standard

Three direct operators face three monetisation tests

One Mobikwik Systems is the cleanest volume-to-margin case. It operates a wallet, UPI processing, bill payments and the Zaakpay payment gateway, between consumers, merchants and banking partners. Its FY26 payment GMV reached ₹1,821 billion and grew 57%, while the company’s disclosed payment take rate declined from 0.64% in Q4 FY25 to 0.40% in Q4 FY26. A future MDR helps only if it adds net payment income faster than pricing and gateway costs absorb it. Watch payment revenue and take rate by transaction type, not headline GMV.

AvenuesAI, through CCAvenue, represents the merchant-acquiring layer. Its evidence describes an omnichannel B2B payment gateway serving more than 10 million merchants and an annualised TPV run-rate of about ₹10 trillion. Management’s stated route to better economics is smarter routing, lower fraud and value-added services that raise net take rate. The condition is whether the stack retains more revenue after routing, failure and compliance costs. Scale alone does not prove conversion.

Fino Payments Bank shows why a bank’s UPI relationship is not automatically a fee windfall. It provides digital payments and cash-management services through a large merchant and customer network, but management has also described a pause in UPI P2M activity while it reviews the business and builds other growth levers. A bank can have distribution while still deciding which partnerships justify the economics. MDR would need to improve those unit economics before changing capital allocation.

The infrastructure boundary is where the thesis can break

Network People Services Technologies is a useful boundary rather than a fourth direct beneficiary. NPST provides UPI, IMPS, CBDC, acquiring, settlement and fraud-management technology to banks and fintechs, with transaction-based and SaaS models. Its management has explicitly described domestic UPI’s revenue model as stagnant and is trying to move toward international SaaS and RegTech. NPST could sell into infrastructure demand, but the evidence does not establish fee receipt or domestic UPI growth.

Two risks dominate. A low rate, narrow merchant definition or multi-party sharing could leave listed-company revenue barely changed. Merchants may also negotiate discounts or shift payment mix, leaving payment companies with higher costs before any margin.News sourceslivemint.comBusinessLine

The conclusion is narrower than “UPI becomes monetised”. The proposal tests who owns the relationship: MobiKwik’s platform, AvenuesAI’s acquiring stack, Fino’s distribution or NPST’s infrastructure. Watch the final merchant definition and rate, then compare take rates, gateway costs, incentives, transaction mix and payment margins. Those facts will show whether policy became economics.News sourceBusiness Standard

Questions for the next filing

What would prove the connection?

  1. 1

    Which listed companies directly process UPI or provide the acquiring infrastructure closest to a future MDR?

  2. 2

    Would a permitted fee improve company revenue and margins, or be absorbed by merchant incentives, sharing and payment costs?

  3. 3

    What evidence would distinguish a legislative possibility from a material change in earnings?

Risks and limits

What could break the argument?

  • The bill may pass with a narrow merchant definition or low rate, and revenue may be divided across banks, networks, acquirers and processors before it reaches any listed company.
  • Large merchants may renegotiate incentives or shift payment mix, leaving processors with higher compliance, routing and customer-acquisition costs but little improvement in net take rate.
  • Company-specific execution remains decisive: MobiKwik is managing take-rate compression, Fino has reviewed UPI P2M economics, and NPST is reducing its dependence on domestic UPI-linked revenue.

Keep following the thread

What we would check next

  • The enacted text: merchant threshold, MDR rate, eligible payment instruments and the recipients of the fee
  • MobiKwik and CCAvenue payment take rates, gateway costs, merchant incentives and payment-segment margins
  • Fino’s UPI P2M restart, merchant economics and cash-management mix
  • NPST domestic TSP share versus international SaaS and RegTech revenue
  • Any disclosure showing that MDR is passed through to merchants rather than absorbed by the ecosystem

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Research basis · 13 records reviewed

The narrative was checked against 7 company records and 6 topical sources. News links also appear beside the paragraphs that rely on them.

Research for idea discovery, not a recommendation to buy or sell securities.