Paytm’s stock took a big hit on Thursday, June 12. The share price of its parent company, One 97 Communications, fell by 10% in early trading, reaching a low of ₹864.40. This drop came after the Finance Ministry clearly denied recent rumors about charging a fee called Merchant Discount Rate (MDR) on UPI transactions.
Lately, there have been reports saying the government might bring back MDR fees for UPI payments. But on Wednesday, the Finance Ministry called these reports “false, baseless, and misleading.” In a post on social media platform X, the ministry said there are no plans to charge MDR on UPI payments and such rumors only cause unnecessary fear and confusion.
“These claims are completely untrue. The government is fully committed to promoting UPI for digital payments,” said the ministry.
Earlier reports suggested that MDR might return for UPI transactions over ₹3,000 to support banks and digital payment companies.
In March, the Payments Council of India (PCI), which represents 180 non-banking digital payment companies, had requested the government to reconsider the Zero MDR policy. Since this policy was introduced in January 2020, companies have been struggling with the high costs of running UPI services. Even though the government provided ₹1,500 crore as incentives, PCI says this amount is much lower than the actual yearly cost of ₹10,000 crore.
Read more: SEBI Announces ‘SEBI Check’ to Verify UPI IDs for Safer Investments…
The PCI had proposed bringing back MDR on RuPay debit cards and suggested a 0.3% MDR for big merchants using UPI.
UPI remains India’s top method of digital payment. In FY24, UPI handled over 131 billion transactions worth more than ₹200 lakh crore. In January 2025 alone, UPI saw a record 17 billion transactions worth ₹23.5 lakh crore.
Meanwhile, UBS, a global financial firm, said the Finance Ministry’s denial of MDR reports is not good news for Paytm. UBS explained that even a small income from MDR or more government support would have helped Paytm’s profits. Without these, they expect Paytm’s earnings in 2026 and 2027 to be lower than earlier estimates.
UBS has kept a ‘Neutral’ rating on Paytm shares and has set a target price of ₹1000.
