It's back to square one for payments gateway firms

Viability Issue

- MAHESH NAYAK & ANANYA GROVER

THE FINANCE MINISTRY'S clarification last week that no merchant discount rate (MDR) will be applicable on payments made through the Unified Payments Interface or UPI has again put a question mark on the sustainability of the payments gateway industry.

Nowonder, the performance of Paytm (One97 Communications) stock—the only listed payments gateway company—has been wobbly since the ministry's denial. The stock had steadily been rising since March—from a low of around ₹650 to around ₹960—before that the 'no imposition of MDR' clarification came. The stock has fallen around 10% since then to close at ₹877.30 on Monday.

MDR is a fee that banks charge merchants for processing payments in real time. Reports claimed last week that the government was planning to introduce MDR on transactions of over ₹3,000.