Paytm parent One97 Communications witnessed a sharp selloff in early trade on Thursday, with its shares tumbling nearly 10% amid speculation around the imposition of Merchant Discount Rate (MDR) on UPI transactions—a rumor that the Finance Ministry later firmly denied.
On the NSE, Paytm stock dropped as much as 10% to ₹864.40, while on the BSE, it touched an intraday low of ₹864.20, down 9.97%. The stock was trading 7.52% lower at ₹888 as of 9:46 AM, significantly underperforming the broader BSE500 index, which was down just 0.19%.
What Triggered the Selloff?
The panic began with media reports speculating that the government may introduce MDR—a fee typically charged to merchants for card-based transactions—on UPI payments. This spooked investors, especially those holding stocks in the digital payments space like Paytm.
However, the Finance Ministry swiftly stepped in to quash these rumors.
“Speculations and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading… The Government remains fully committed to promoting digital payments via UPI,” the Ministry said in an official post on social media.
Why MDR Matters
The Merchant Discount Rate (MDR) is the fee merchants pay for accepting digital payments. While it’s standard for card transactions, the government made MDR zero for RuPay debit cards and BHIM-UPI from January 2020, to promote digital adoption.
To further support the digital payments ecosystem, the government also launched an Incentive Scheme that reimburses stakeholders for UPI person-to-merchant (P2M) transactions under ₹2,000, particularly aiding small merchants.
Investor Nervousness Despite Clarification
Despite the government’s denial, the initial speculation was enough to trigger high-volume selling. Within the first 30 minutes of trade, Paytm saw:
- 83.29 lakh shares traded on the NSE (vs. 2-week average of 41.67 lakh)
- 3.71 lakh shares on the BSE (vs. average of 2.77 lakh)
Clearly, investor nerves were on edge.
UPI Growth Stays Robust
Even as the MDR debate flared, UPI continues to grow at a breakneck pace:
- May 2025: UPI processed 18.68 billion transactions worth ₹25.14 lakh crore
- April 2025: ₹23.95 lakh crore in transactions
This underscores the critical role UPI plays in India’s digital economy—and why government policy clarity is crucial for companies like Paytm.
Bottom Line
Thursday’s stock slump highlights the sensitivity of fintech valuations to regulatory speculation. While the Finance Ministry has reaffirmed its support for zero-MDR UPI payments, the market reaction underscores the need for timely communication and investor confidence in policy direction—especially in a sector as fast-evolving as digital payments.
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