MUMBAI – In a major win for India’s digital payment ecosystem, shares of fintech leaders Paytm (One 97 Communications) and MobiKwik witnessed a powerful surge during the special Budget Sunday trading session on February 1, 2026. The rally was ignited by Finance Minister Nirmala Sitharaman’s announcement of a ₹2,000 crore incentive scheme to promote low-value UPI and RuPay debit card transactions for the upcoming financial year.
Paytm shares, which have been under intense scrutiny over the past year, staged a dramatic recovery, jumping nearly 22% from the day’s low, while MobiKwik saw significant buying interest as the industry prepares for its long-awaited quarterly results.
The Catalyst: Reviving the “Zero-MDR” Safety Net
The fintech industry has long complained that the Zero Merchant Discount Rate (MDR) policy—while great for consumers—has been a “financial drain” on service providers who bear the cost of processing billions of transactions.
The new ₹2,000 crore subsidy addresses these concerns by:
- Offsetting Operational Costs: The incentive provides a direct reimbursement to banks and fintech firms for processing small-ticket transactions (typically up to ₹2,000), which form the bulk of UPI volumes.
- Improving Profitability: Analysts believe this allocation will help companies like Paytm and MobiKwik protect their operating margins, which were previously under pressure due to rising infrastructure and cybersecurity costs.
- Rural Expansion: The funding is specifically aimed at deepening digital payment penetration in Tier-3 to Tier-6 cities, where merchant onboarding remains a high-cost endeavor.
Market Reaction: Paytm’s 22% V-Shaped Recovery
The trading session was a rollercoaster for Paytm investors. After opening cautiously, the stock faced early selling pressure before the Budget speech began. However, once the “₹2,000 crore UPI push” was mentioned, the stock skyrocketed.
- Paytm (NSE): Recovered 22% from its intraday low, reflecting a massive “sigh of relief” from institutional investors.
- MobiKwik: The stock edged higher ahead of its February 3rd board meeting, where the company is expected to report its latest quarterly earnings.
- Fino Payments Bank: Also saw a positive uptick, benefiting from the broader sentiment shift in the digital finance space.
[Image showing Paytm’s V-shaped recovery chart on Feb 1, 2026]
Why the Industry Needed This “Fiscal Booster”
For the previous fiscal year, the government had significantly slashed the incentive to around ₹1,500 crore, leading to fears of a “subsidy squeeze.” Today’s hike to ₹2,000 crore signals that the government is willing to support the “fintech miracle” as it scales toward a goal of 100 billion transactions per month.
“This is a vote of confidence in the digital public infrastructure. While the industry wanted a reintroduction of MDR for large merchants, this ₹2,000 crore allocation ensures that the ecosystem remains viable and innovation doesn’t stall,” said a fintech sector lead at a top brokerage.
What Should Investors Do Next?
While the incentive is a huge positive, the “long-term” sustainability of fintech stocks will depend on their ability to diversify into credit (lending) and insurance.
- Watch the February 3 Results: MobiKwik’s upcoming earnings will be the first real test of whether the sector’s operational losses are narrowing.
- Lending Growth: For Paytm, the focus remains on its ability to leverage its 13 million Soundbox users into high-margin loan customers.
- Resistance Levels: Technical analysts point to a strong resistance for Paytm near the ₹1,200 mark. A sustained close above this could signal a long-term trend reversal.