Following the introduction of the merchant discount rate (MDR), brokerages expect a new revenue pool for the payments industry, estimated at Rs 16,000–Rs 20,000 crore by FY28, and have accordingly revised earnings estimates for payment aggregators.

Under the revised framework, eligible person-to-merchant (P2M) transactions exceeding Rs 2,000 will be subject to a 0.4% merchant discount rate (MDR), with a maximum charge of Rs 300 per transaction.

Citi projects that the new framework will create a revenue pool of Rs 16,000–20,000 crore across the payments ecosystem. “Cumulatively, we estimate 45-50% of the run-rate P2M transactions by value may be eligible for 40 bps MDR, which at latest month’s annualised run-rate of Rs 110 lakh crore in P2M transactions, implies a revenue pool of up to Rs 20,000 crore.” It estimated revenue for Paytm of about Rs 300 crore from the UPI app business and Rs 600–700 crore from merchant acquiring, while projecting Pine Labs’ revenue at Rs 180 crore by FY28.

The brokerage added that banks will also earn revenue from the move, estimating that about 60% of the total will go to them. Yes Bank is expected to be the biggest beneficiary, followed by Bank of Baroda, Punjab National Bank and IndusInd Bank.

Bernstein estimated a revenue pool of Rs 14,000 crore – Rs 19,000 crore for industry by FY28, considering the Rs 130 lakh crore of P2M transactions.

“We recently revised Paytm’s earnings by 20-25% to factor 25 bps,  but we now further raise earnings for FY28-29 by 10-12% to factor a 40 bps revenue pool after making adjustments for exemptions, competitive pricing and other aspects,” Jefferies said in a report. For Pine Labs, the brokerage firm said that it could create a revenue pool of Rs 160 crore by FY28.