Gurugram-based fintech company One MobiKwik Systems expects the introduction of merchant discount rates (MDR) on selected Unified Payments Interface (UPI) transactions to generate at least ₹100 crore in additional payment revenue during FY28. The company shared this estimate during its second-quarter FY27 earnings call on November 2, 2026, as it looks to increase monetisation across its consumer and merchant payment businesses.
MobiKwik’s management believes the proposed MDR framework will improve payment margins and create a more sustainable business model for digital payment companies. Executive Director and CFO Upasana Taku said the additional revenue would depend on the implementation timeline, which has been deferred by the National Payments Corporation of India (NPCI). The company expects the change to improve its financial performance, although the additional revenue will not translate entirely into profit because payment ecosystem partners will also receive a share.
How UPI MDR Could Generate ₹100 Crore for MobiKwik
Merchant discount rate is a transaction fee paid by a merchant to the financial institutions and payment service providers involved in processing a digital payment.
For several years, most UPI transactions in India have operated without MDR, limiting the direct revenue that payment companies can generate from ordinary UPI transactions.
The proposed framework introduces charges on selected merchant transactions, creating a new revenue opportunity for payment platforms such as MobiKwik, PhonePe and Paytm.
During its earnings call, MobiKwik’s management said the company expects at least ₹100 crore in additional payment revenue in FY28 once the framework is implemented.
CFO Upasana Taku explained that the company had calculated the potential benefit based on its existing transaction volumes and the eligible pool of transactions exceeding ₹2,000.
She also clarified that the estimate remains subject to the final implementation date. The company plans to provide further guidance once the regulatory timeline becomes clearer.
The projected ₹100 crore represents additional payment revenue, not guaranteed net profit.
What Is the New UPI MDR Framework?
The new MDR framework applies to selected person-to-merchant (P2M) UPI transactions rather than every payment made through UPI.
Under the announced structure, eligible merchant transactions above ₹2,000 attract an MDR of 0.4%, subject to specified exemptions and caps.
Some essential-sector transactions have separate pricing arrangements.
The framework also protects individual users and small merchants from additional charges.
| Transaction category | MDR treatment |
|---|---|
| Person-to-person UPI transfers | No MDR |
| Merchant payments up to ₹2,000 | No MDR |
| Eligible merchant payments above ₹2,000 | 0.4% |
| Transactions of ₹75,000 and above | MDR capped at ₹300 |
| Selected essential-sector transactions | Flat ₹5 charge |
| Eligible small merchants under the zero-MDR framework | No MDR |
According to the Ministry of Finance, approximately 96% of merchant transactions will remain unaffected by the new framework.
The MDR is paid within the merchant payment ecosystem. It is not intended to be a direct transaction charge on consumers.
However, the framework’s implementation was postponed by NPCI on October 13, 2026, with the revised date to be announced separately after Diwali.
This delay is important because MobiKwik’s FY28 revenue estimate depends on when the new payment economics begin operating.
How Much of the MDR Revenue Will MobiKwik Keep?
Although the proposed MDR could generate additional revenue, the entire amount will not belong to MobiKwik.
The payment ecosystem involves several participants, including the merchant-acquiring company, issuing banks, payment service providers and third-party application providers.
During the earnings call, Taku explained that the merchant-side MDR would be shared among these participants.
She indicated that where a 40-basis-point gross MDR is booked on merchant transactions, MobiKwik expects approximately 20%–25% of the merchant-side amount to flow to the bottom line after the relevant ecosystem costs and revenue sharing.
The economics may differ across transaction categories. In some verticals, a larger proportion of the additional revenue could translate into profit.
This distinction matters because payment revenue and profitability are not the same thing.
For MobiKwik, the opportunity is to increase the revenue generated from existing payment activity while improving the economics of acquiring and serving merchants.
MobiKwik’s Payment Margins and Merchant Business
MobiKwik’s management said its blended payment margin currently stands at approximately 13 basis points.
A basis point represents one-hundredth of a percentage point. Therefore, 13 basis points equal 0.13%.
The company also highlighted a difference between consumer and merchant payment economics.
Merchant payments currently generate a lower net take rate of approximately 3–4 basis points, while consumer payments generate a higher take rate.
As merchant transactions grow faster, the increasing share of merchant payments can put pressure on the company’s consolidated payment margin.
The introduction of MDR could help improve merchant payment monetisation and partially offset this pressure.
MobiKwik also expects merchant payments to become a larger part of its overall payments business. Management indicated that merchant payments currently account for approximately 20%–22% of total payment gross merchandise value (GMV).
The company is investing in merchant acquisition, QR-code infrastructure and soundbox distribution to expand this business.
MobiKwik Reports Fourth Consecutive Profitable Quarter
The MDR opportunity comes as MobiKwik continues improving its financial performance.
In Q2 FY27, the company reported its fourth consecutive profitable quarter, supported by growth in merchant payments and financial services.
Key financial figures included:
| Financial metric | Q2 FY27 |
|---|---|
| Revenue from operations | ₹295.7 crore |
| Total income | ₹302.8 crore |
| EBITDA | ₹22.7 crore |
| EBITDA margin | 7.5% |
| Profit after tax | ₹11.8 crore |
| Year-on-year GMV growth | 35% |
Merchant payment GMV increased 76% year-on-year, while lending disbursals reached ₹1,083 crore, according to the company’s earnings presentation and call.
The results indicate that MobiKwik is attempting to grow its payments and financial services businesses while maintaining profitability.
The potential MDR revenue could provide another source of growth if the framework is implemented as expected.
MobiKwik Targets Higher Profitability in FY28
Management also discussed its profitability ambitions during the earnings call.
Taku indicated that MobiKwik had targeted approximately ₹40 crore in profit after tax for FY27 and ₹75 crore–₹80 crore for FY28 before considering the potential UPI MDR benefit.
With the additional revenue opportunity, the company indicated that it was targeting approximately ₹100 crore in FY28 profit after tax, subject to the implementation of UPI MDR.
This is a management target rather than a guaranteed financial outcome.
The company will need to account for revenue-sharing arrangements, operating costs and the timing of MDR implementation before the additional contribution becomes visible in its financial statements.
The distinction between its existing profitability guidance and the potential MDR upside will be important for investors evaluating the company’s future earnings.
Competition Among India’s UPI Companies Could Change
The introduction of MDR could also change competition among India’s digital payment companies.
Platforms such as MobiKwik, PhonePe and Paytm have invested heavily in merchant acquisition, QR codes, soundboxes and payment infrastructure.
Without transaction-based revenue from many UPI payments, companies have depended on other services, including merchant devices, subscriptions, lending, wallets and financial products.
MDR could provide another monetisation opportunity.
MobiKwik’s management believes the change will encourage competition based more on product quality, technology and customer service rather than simply the ability to spend heavily on acquiring users and merchants.
The framework could also improve the commercial case for expanding merchant acceptance infrastructure in smaller cities.
However, competition will remain intense. Companies will need to balance merchant pricing, transaction volumes and revenue-sharing arrangements to retain their market positions.
The Bigger Picture
The potential return of MDR to selected UPI transactions represents an important change in India’s digital payments business model. UPI has become a major part of the country’s financial infrastructure, but payment companies have struggled to monetise many transactions directly. A transaction-based revenue mechanism could help improve the economics of maintaining payment networks and acquiring merchants.
For MobiKwik, the opportunity is particularly relevant because its merchant payments business is expanding faster than its consumer payments segment. However, the actual financial benefit will depend on eligible transaction volumes, the revenue-sharing structure and implementation timing. The policy also preserves free payments for individuals and most merchant transactions, limiting the scope of the new charges.
Looking Ahead
The next major development will be NPCI’s announcement of the revised implementation date for UPI MDR. MobiKwik will then be able to provide more precise guidance on how the new framework will affect its payment revenue and profitability. Investors will also monitor merchant GMV growth, payment margins and the company’s ability to increase its share of eligible high-value transactions.
If the framework is implemented as expected, MobiKwik could gain an additional revenue stream in FY28 and improve the economics of its merchant business. However, the projected ₹100 crore remains a management estimate, and the amount flowing into profits will depend on ecosystem costs and revenue-sharing arrangements. The company’s ability to convert higher transaction volumes into sustainable earnings will remain central to its long-term growth strategy.
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