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The National Payments Corporation of India’s (NPCI) introduction of a 0.4% merchant discount rate (MDR) on UPI person-to-merchant (P2M) transactions above Rs 2,000 could unlock an annual revenue of Rs 80-230 crore for Pine Labs, its co-founder and CEO Amrish Rau confirmed on the Q2 FY27 analysts’ call. For perspective, the company clocked an operating revenue of Rs  Rs 806.2 crore in Q2 FY27.

With new monetisation levers emerging, the fintech company has decided to deploy about 10 lakh soundboxes across India to capture merchant UPI transactions that it had been losing to rivals.

1. Why are soundboxes suddenly so important?

Until now, Pine Labs ignored certain large, merchant UPI payments that slipped to competitors’ soundboxes due to a lack of monetisation.

This is a nuance which, honestly, as a common consumer, you and I do not notice it every day. What happens is you will have a merchant which will have, let us say, a point-of-sale (PoS) machine out there. And just on the corner of the table, there might be another soundbox also kept there. So while the POS machine, which is fully integrated into their billing system, might be doing 80%, 85% of the transactions, there could be these 10%, 15%, 20% of the transactions which could be just going to the soundbox out there.

Earlier, our approach was not to bother with it. As it is UPI, there is no monetisation out of it. So let it go where it is going. Now I am saying, no, no, no, I want that 20% of transactions also to come to me and might as well put up a soundbox out there and keep it.

Our idea is that where we are already present, if there are transactions that we are losing on UPI, let us capture those transactions. And that is where the 10 lakh soundboxes deployment number came from. — Pine Labs CEO.

According to the management, 75-77% of transactions on its PoS devices are now UPI-based. Only 25% transactions are card-based. So, it’s clear how Pine Las could earn recurring revenue from UPI MDR.

2. Merchants can’t afford to pay both UPI MDR and monthly rentals

With UPI MDR coming into play, the economics of the PoS business could change, according to management.

“Merchant cannot afford to be paying Rs 125 monthly rent on top of 40 basis points on every transaction. It is just price prohibitive for them. So we think that market going forward will have one of the two commercials attached to it. And from our standpoint, it will be much more on the transaction side,” said Rau.

For years, Pine Labs bought PoS devices and leased them to merchants, earning a recurring rental income. However, the model is now changing. During the Q1 FY27 earnings call, management had said roughly 25-30% of new terminal deployments required merchants to pay for the hardware upfront.

3. Pine Labs ‘fully ready’ for agentic payments, but customers are still hesitant

Pine Labs is “fully ready” to power purchases initiated by consumer AI assistants such as Muse or Instinct, Rau told analysts.

However, “consumers are still extremely uncomfortable to give their cards and their bank account information to personal agents. We have actually been working on the solution over the next two months,” he said.

The commentary come months after the company demonstrated AI agents completing a purchase on a customer’s behalf using its proprietary Pine Labs Payment Protocol (P3P) at the Global Fintech Fest 2026.

The fintech firm is also increasingly open-sourcing its AI agents to further adoption of agentic payments and agentic commerce.

“In AgenticOrg, we have actually open-sourced agents and second on grantex.dev, we again open source the guardrails which are required to manage agents. So, what we did was we basically created the enabling infrastructure as far as agentic commerce and agentic payments are concerned,” Rau said.

In its investor presentation, the company said 89% of code changes are made by AI agents.

4. Pine Labs is expanding its issuing platform beyond gift cards

Besides its flagship PoS business, the fintech also generates revenue from credit issuance and acquiring processing services, distribution of prepaid cards and gift cards.

Consumer brands and enterprises use Pine Labs’ issuing solutions to offer prepaid cards for gifting, promotions, cashback, wallets, refunds, rewards, loyalty programmes, company-issued expense cards for employees, and employee and channel incentives.

On the Q1 FY27 analyst’s call, management disclosed for the first time publicly that its issuing platform was turning in a revenue of Rs 100 crore a year.

Pine Labs said its prepaid and gift card solutions are finding new use cases. For example, it has onboarded gaming platforms such as Roblox, Xbox and Nintendo for gift card and prepaid solutions.

To further expand this business, the company plans to launch an employee tax benefit card by November-end or early December.

5. Pine Labs launches installment payment services for quick commerce

India’s top four quick commerce platforms now use Pine Labs’ payment gateway services for daily transactions, Rau said. The fintech firm has also begun facilitating installment payment services for these quick commerce players on its online platform across electronics, mobile phones and consumer durables.

“During Flipkart’s Big Billion Days, we were one of the payment gateways that they had enabled for. What that is showing me is that we are actually making progress with the products where the largest and the biggest retailers are continuing to use Pine Labs in the online world also. I also wanted to very quickly share with you that one of the largest billers, consumer billers in the country has signed up with Pine Labs. It will go live in Q3. So we are again winning new deals on the bill payment side also,” said Rau.

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