Paytm, Mobikwik, Pine Labs shares crash up to 10%. What’s behind the sharp plunge?

Shares of Paytm parent One 97 Communications crashed 10% on Thursday, pushing its market capitalisation below the Rs 1 lakh crore mark, while Mobikwik and Pine Labs fell up to 8% amid reports of a possible delay in the introduction of the Merchant Discount Rate (MDR).

The sharp selloff in Paytm shares briefly pushed it to the lower circuit of Rs 1,558.80 apiece on Thursday morning, wiping off nearly Rs 10,972 crore from its market capitalisation in just minutes from opening. Mobikwik shares meanwhile plunged over 8% to Rs 234.52 apiece, and Pine Labs shares were down over 4% to Rs 170.21 apiece.

Also read | UPI MDR bonanza: Why Paytm may win bigger, but Pine Labs could gain faster

UPI fee introduction delayed?

The NPCI last month announced a Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions above Rs 2,000, effective October 15. Under the new structure, merchants pay 0.4% on eligible transactions above Rs 2,000. Following the announcement, shares of UPI aggregators jumped sharply, with analysts expecting Paytm and Pine Labs to emerge among the early beneficiaries.

However, media reports citing sources now suggest that the rollout of the new MDR fee might get delayed following pushback. A proposal to defer the introduction of MDR on UPI transactions to January 1 from October 15 is currently under consideration by the government, Business Standard reported, citing people familiar with the matter.

UPI fee delay to skip festive season?

Such a delay in the fee would keep UPI payments free for merchants through the entire festival season till Christmas, amid pushback from retail traders’ associations, the report highlighted. This comes after members of the UPI and Services Steering Committee, headed by the National Payments Corporation of India (NPCI), met on Wednesday to discuss the timing of the MDR and other clarifications, the report added.

The Economic Times could not independently verify the report.

Also read | UPI charges from October 15: FAQs on who will pay 0.4% MDR and what consumers, small vendors & large merchants need to know

The All India Consumer Products Distributors Federation (AICPDF) and the All India Mobile Retailers Association (AIMRA) sought deferment of the proposed MDR in view of the upcoming festive season and heightened business activity, besides a review of the Rs 1 lakh threshold, which they want increased to Rs 5 lakh. They have also sought that merchant-to-merchant transactions be kept outside the MDR regime, stating such transactions are an important part of the trading ecosystem.

The trade bodies earlier called for a ‘New UPI Day’ on October 2, but withdrew the protest after meeting Finance Minister Nirmala Sitharaman. "In view of the constructive discussions and the assurance that the concerns raised by the trading community will receive due consideration, the All India Consumer Products Distributors Federation (AICPDF) and the All India Mobile Retailers Association (AIMRA) have decided to withdraw the protest call," Praveen Khandelwal, secretary general of the Confederation of All India Traders (CAIT), said after the meeting.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.