Shares of One 97 Communications, the parent company of Paytm, plunged nearly 10% on Thursday after the Finance Ministry rejected reports suggesting the return of merchant discount rate (MDR) charges on UPI transactions.
Around 10:19 am, Paytm shares were trading 5.27% lower at Rs 909.85 on the Bombay Stock Exchange (BSE). However, the stock dropped to an intra-day low of Rs 864.20, reacting sharply to the government’s clarification that no such fee would be introduced.
WHAT IS MDR?
MDR is a fee paid by merchants to banks or payment service providers like Paytm for processing real-time payments. To promote cashless transactions, the government had scrapped MDR charges on UPI years ago. But recent online reports speculated that a new MDR might be levied on large-ticket UPI payments.
Calling these claims “baseless and sensational,” the Finance Ministry issued a strongly worded statement, saying such misinformation creates “unnecessary uncertainty, fear, and suspicion” among citizens.
Earlier this year, the Payments Council of India, a body representing digital payment firms, wrote to Prime Minister Narendra Modi, recommending the return of a nominal MDR on RuPay and UPI transactions, particularly for large merchants. The Council suggested a 0.3% MDR on UPI for high-value transactions.
While that proposal has been under consideration for industry viability, the government has not taken any action, and Thursday’s statement made clear there are no such plans at present.
Paytm is one of several UPI platforms but faces stiff competition from companies like PhonePe and Google Pay, which together command a lion’s share of the UPI market.
Despite the market jitters, UPI usage continues to grow. In May, the platform processed 18.68 billion transactions worth Rs 25.14 lakh crore, marking a 33% jump in volume from the same month last year.
The daily average for May stood at 602 million transactions, amounting to Rs 81,106 crore per day. India now accounts for nearly half (48.5%) of all global real-time payment transactions, cementing its lead in the digital payments race.
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