Paytm puts a ₹700 crore price on UPI merchant charges that have not started

On 21 July 2026, asked what possible government moves to let the industry charge for UPI payments could be worth to Paytm, its founder and chief executive said the company had tried to model it but would wait and watch until the formula was known. Three months later it gave a number. Madhur Deora, the chief financial officer, said the 2.5 basis points of extra margin the company expects on its current payment volume of ₹28 lakh crore would bring in slightly more than ₹700 crore, and that this was about right for the next financial year. That is more than nine-tenths of the ₹757 crore of operating profit Paytm earned over the last four quarters combined, calculated from the filed results.

The fee in question is the merchant discount rate, a charge paid by the shop that accepts a payment. Its rules for UPI come from NPCI, the body that runs the network, and Mr Deora said Paytm had taken that framework as published. He said the company rarely comments on something not yet in force and gave the estimate because analysts and investors had asked about it. The fee would have started on 15 October had it not been postponed a day or two before launch. He expects the framework to stand but said he does not control it, and that how hard rivals compete for consumers once the fee starts will only become clear in the second or third quarter after launch. Management presents the money as extra on top of a plan that does not depend on it: "the MDR on UPI is an upside to our business model. It is not fundamental to our business model."

That leaves the business as it runs today, and it is improving without the fee. Operating margin, which here means revenue less operating costs, before depreciation and excluding other income, was 10.1% in the September 2026 quarter against 6.8% a year earlier. Revenue rose 28.5% from a year earlier. Over the last six quarters the margin rose in four of the five moves from one quarter to the next.

The company's own yardstick sits higher. On 7 May 2026 it said it expected to reach an EBITDA margin of 15-20% in two and a half to three years. EBITDA is the company's measure and differs from the operating margin above, but on either the business has some distance to cover. Mr Deora now gives a rule for covering it: over any three or four quarters, indirect costs such as marketing, sales, service and cloud should grow at less than half the pace of revenue. In May he had said only that they would grow significantly more slowly than revenue.

Below the operating line, profit is thinner than the margin suggests. Depreciation took ₹146 crore last quarter, and other income of ₹178 crore made up 61% of profit before tax, calculated from the filed results. A higher tax rate left net profit barely above the quarter before. More is coming: fixed assets grew to ₹1,123 crore at the end of September from ₹906 crore six months earlier, Mr Deora said depreciation would increase into the next financial year, and fuller guidance on capital spending is due next quarter.

The current quarter carries two costs management named in advance. A large lending partner that went six quarters without default-loss guarantees, under which Paytm absorbs part of the losses on loans it sources, wants them again, and the company books that cost upfront. Some of the expense of consolidating its payment platforms, most of which fell last quarter, also runs into this one. Mr Deora said the guarantee is a drag taken alone, yet absolute EBITDA should still rise quarter on quarter. Merchant payment volume, roughly flat last quarter, should also get the festive spending that a late Diwali pushed into the current quarter, though not the large customer whose long-term contract expired and which Paytm would only keep at a different price.