Paytm Shares Fall 10% After Confusion Over MDR Charges on UPI Payment
Paytm Shares Drop Sharply After MDR News Confusion
On June 12, 2025, Paytm’s parent company One97 Communications saw a sharp 10% fall in its stock price — its biggest single-day drop since February 2024. This sudden decline came after a clarification from the Finance Ministry regarding reports of Merchant Discount Rate (MDR) being reintroduced on UPI (Unified Payments Interface) transactions.
What Is MDR?
MDR, or Merchant Discount Rate, is a small fee charged to merchants by banks for processing digital payments. In India, UPI transactions currently do not attract MDR for most users and merchants, making digital payments free and easy.
Why Did Paytm Stock Crash?
Several media reports recently hinted that MDR charges might come back for UPI payments. This raised hopes for companies like Paytm, which rely heavily on UPI for their business. Investors expected this could help boost Paytm’s earnings.
However, the Finance Ministry posted a clarification on social media platform X, clearly saying that no MDR is being introduced on UPI. This dashed hopes of extra revenue for Paytm, leading to a major sell-off in the stock market.
What Analysts Are Saying
Global brokerage firm Morgan Stanley said it had expected some gains for Paytm if MDR was brought back or incentives increased. With neither happening, there could be a 10% downside risk to their medium-term profit estimates.
Paytm had already seen a cut in UPI incentives from the government — from ₹290 crore in FY24 to only ₹70 crore in FY25. This makes the company more dependent on other revenue sources, which are under pressure.
Another brokerage, UBS, has kept a ‘Neutral’ rating on Paytm with a price target of ₹1,000 per share. The stock was last seen trading at ₹880.60, down 8.28% for the day. So far in 2025, Paytm’s shares have dropped 11% year-to-date.
What’s Next for Paytm?
With the government clearly stating there are no plans to introduce MDR charges, Paytm will have to find other ways to grow its revenue. This may include offering more value-added services, loans, or improving margins on other business segments.
The news also highlights how sensitive tech and fintech stocks like Paytm can be to government policy and media speculation. It’s a reminder for investors to stay cautious and wait for official confirmation before reacting to market rumors.
Reference from:- https://www.cnbctv18.com/market/paytm-share-price-tanks-in-biggest-single-day-drop-since-february-2024-on-mdr-clarification-19619747.htm