Shares of One97 Communications Ltd (Paytm) will be in focus today after the Ministry of Finance issued a strong denial of recent reports suggesting that the government was planning to introduce Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions.
In an official statement, the ministry termed such claims as “completely false, baseless, and misleading”, adding that they create “needless uncertainty, fear and suspicion” among citizens. It reiterated the government’s commitment to promoting digital payments through UPI and clarified that there are no plans to levy MDR on these transactions.
The clarification comes after multiple reports circulated online claiming that the government was considering levying MDR on large-ticket UPI payments. MDR is a fee charged by banks to merchants for real-time payment processing. While MDR is still applicable on card transactions in some segments, it was waived for UPI and RuPay card payments in 2020 to encourage digital adoption.
The market has closely tracked these developments, especially due to the potential impact on fintech players such as Paytm, which operate at scale in the UPI ecosystem.
Brokerage UBS, in a note on One97 Communications, said: “The Ministry of Finance in a tweet has refuted reports claiming introduction of MDR on UPI. Delay or non-introduction of MDR is sentimentally negative for Paytm.” UBS has a ‘Neutral’ rating on the stock with a target price of ₹1,000.
The absence of MDR continues to limit monetisation opportunities for UPI players like Paytm, which had earlier indicated that policy clarity on MDR would be a key driver for its payments profitability roadmap.
Disclaimer: The views and target prices mentioned are as stated by UBS and do not represent the opinions or recommendations of this publication. Investors are advised to consult their financial advisors before making any investment decisions.
