Paytm shares dropped over 10% in early trade after the Ministry of Finance issued a strong denial regarding recent reports that suggested the government was considering introducing a Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions. As of 9:15 AM, the shares were trading 8.09% down at Rs 882.75.
The ministry clarified that the reports were “completely false, baseless, and misleading,” emphasizing that there are no plans to levy MDR on UPI payments. It reiterated its commitment to promoting digital transactions, stating that such misinformation creates “needless uncertainty, fear and suspicion” among the public.
The sharp fall in Paytm’s stock reflects investor concerns over the monetisation potential of UPI transactions. MDR is a fee charged to merchants by banks for payment processing. It was waived in 2020 for UPI and RuPay cards to boost digital adoption. While the introduction of MDR could improve revenue for fintech firms, its absence continues to be a profitability challenge.
Brokerage UBS, in a note on Paytm’s parent company One97 Communications, said the delay or non-introduction of MDR is sentimentally negative for the company. UBS maintains a ‘Neutral’ rating on the stock with a target price of ₹1,000.
Paytm, a major player in the UPI space, has previously highlighted that policy clarity on MDR is key to its payments profitability roadmap. The government’s firm stance now puts a near-term brake on these expectations.
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