Shares of ATM and cash management companies gained on September 16 after the introduction of Merchant Discount Rate (MDR) charges on select high-value UPI transactions raised expectations of increased cash withdrawals. 

Radiant Cash Management Services rose as much as 2.8%, while CMS Info Systems gained up to 5% during the session.

The market reaction came a day after the National Payments Corporation of India (NPCI) announced a 0.4% MDR on person-to-merchant UPI transactions above Rs 2,000, effective October 15. The charge will be capped at Rs 300 for transactions of Rs 75,000 and above. UPI transactions up to Rs 2,000 will continue to remain free.

The new framework is expected to affect only select merchant transactions, while person-to-person UPI payments will remain free. The government has also said that the charges will be levied within the merchant payment ecosystem rather than directly on consumers.

Investors are watching the development because some users and merchants could consider cash payments as an alternative for certain transactions once the new charges take effect. This could potentially support demand for ATM services and cash management companies that handle cash replenishment, transportation and ATM operations.

Radiant Cash Management Services shares were trading 2.8% higher at Rs 36.90 around 11:48 AM, while CMS Info Systems was up 3.3% at Rs 230.32. SIS Ltd, which also provides ATM management and cash logistics services, gained 1.2% to Rs 420.

The broader UPI policy change is also creating a new revenue stream for banks, payment service providers and other participants in the digital payments ecosystem. Citi estimates that the new MDR framework could create an annual revenue pool of Rs 16,000 crore to Rs 17,000 crore, although the benefit will depend on transaction volumes, exemptions and how the fees are distributed.

Investors will now track whether the new UPI pricing structure changes payment behaviour and translates into higher cash usage. For ATM-focused companies, any sustained increase in cash withdrawals could influence transaction volumes and demand for their cash management services.

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