IRCTC Numbers Show The Cost Of Free UPI Payments

The company's first-quarter results for FY27 highlight the financial pressure created by the growing use of UPI for online railway ticket bookings. UPI accounted for 51.22% of ticket bookings in Q1 FY27, up from 48.72% a year earlier.

The figures come as a Parliamentary panel considers introducing a calibrated Merchant Discount Rate (MDR) on high-value UPI transactions. The proposal aims to reduce the financial burden of maintaining zero-MDR payments.

UPI Crosses Half Of IRCTC's Ticket Bookings

IRCTC Chairman and Managing Director Rahul Himalian said UPI's share of ticket bookings has crossed the 50% mark. The increase has not been matched by similar growth in internet ticketing revenue.

An analyst during the earnings call noted that internet ticketing revenue had remained largely unchanged for eight quarters. This was despite higher passenger volumes and an expanding number of trains.

Himalian acknowledged the pressure created by the shift towards UPI. He said the growing use of UPI is affecting the company's profitability.

IRCTC collected ₹248 crore in convenience fees during the quarter from 13.27 crore tickets. This works out to an average of about ₹19 per ticket.

The company charges convenience fees of ₹10-20 for UPI transactions. Card and credit-line payments attract higher fees of ₹15-30.

Lower Fees Put Pressure On Revenue

IRCTC's UPI share increased by around 2.5 percentage points during the quarter. According to the report, this could represent roughly 33 lakh tickets moving to the lower-fee payment method. The potential reduction in fee income from this shift is estimated at around ₹1.7-3.3 crore for the quarter. This is an illustrative calculation based on IRCTC's disclosed figures and is not a company-reported number.

IRCTC has responded by using different convenience fees for different payment methods. The company charges more for credit card and credit-line transactions than for UPI payments.

Himalian said this approach was intended to offset some of the impact from the changing payment mix. However, convenience fee growth remained relatively modest.

Convenience fee revenue increased 4.89% quarter on quarter. An analyst on the call noted that this pace has struggled to keep up with inflation over the past seven years.

Parliamentary Panel Seeks MDR On High-Value UPI

The pressure on IRCTC reflects a broader debate over who should bear the cost of India's zero-MDR UPI system.

The Standing Committee on Finance, headed by Bhartruhari Mahtab, has highlighted the gap between the government's compensation and the industry's costs. The Centre has allocated ₹2,000 crore to support zero-MDR transactions, while the committee estimates the industry's operational costs at around ₹20,700 crore.

The panel has called for a calibrated MDR on high-value transactions. Such a move could provide an additional revenue mechanism for payment ecosystem participants.

IRCTC's internet ticketing earnings before interest and taxes (EBIT) margin fell to 80.33% in Q1 FY27 from 84.12% a year earlier. On the segment's ₹361 crore revenue base, the decline represents roughly ₹14 crore in lower profit.

The company's results therefore provide a clear example of the commercial impact of free UPI payments. For IRCTC, the growing preference for UPI is increasing transaction volumes while putting pressure on convenience-fee income.

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