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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%….
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