Paytm Share Price Tanks 10% After Finance Ministry’s BIG Update On MDR

Paytm (One97 Communication) shares crashed nearly 10% during Thursday's intraday trade following the Finance Ministry's rejection of claims to provide a merchant discount rate (MDR) on UPI payments.

Paytm, One97 Communiciation shares recovered from their opening losses and were trading 5.25% lower at Rs 909.75 per share on BSE at 10:33 am. The company stock's market capitalisation stood at Rs 58,033.73 crore. The stock opened lower at Rs 929.95 apiece and touched an intraday low mark of Rs 864.20 apiece.

Finance Ministry Rejects MDR Claims

The Ministry of Finance, in a social media statement, called media reports claiming MDR charges on UPI transactions as completely 'false, baseless, and misleading'. It also called such speculations a risk which may create uncertainty among people and reiterated central government's fully committed to promoting digital payments.

"Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading. Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens.The Government remains fully committed to promoting digital payments via UPI," read a post by Ministry of Finance on X. Earlier, several media reports had hinted that MDR changes could be reintroduced.

Motilal Oswal in its latest report related to Paytm had noted that discussions around MDR on UPI and its implementation could significantly boost the company's business in long-run. The brokerage has noted that Paytm may capture around 7-8 bps of the total market of MDR, if implemented.

"Discussions around MDR on UPI are gaining momentum and are expected to
materialize within the current financial year. This should enable monetization on
both the QR and consumer fronts. PAYTM is likely to capture around 7-8 bp of
the total MDR implemented. The financial services customer base has declined, mainly due to adjustments in PL loan and reduced activity on PAYTM Money, driven by regulatory changes. A recovery is expected, with stronger prospects on the ML side," noted Motilal Oswal in its report.

What is MDR?

Banks of payment services providers like Paytm earn from charges, which is known as MDR, from merchants for processing payments in real time. The government earlier, had removed MDR charges on UPI transactions.

In a bid to get some relaxation on government's order on MDR, the Payments Council of India wrote a letter to Prime Minister Narendra Modi urging the central government to reconsider its stance on MDR on UPI and RuPay debit card transactions. The council had proposed a 0.3% MDR for lare merchants using UPI and a minimal chargefor all RuPay debit card transactions.

However, the central government's recent clarification on MDR rates on UPI has dimmed all hopes related to the return of MDR on UPI payments. Earlier, several stock analysts and experts had hinted that MDR rates could be highly beneficial for payments banks like Paytm.

Paytm Share Price Trend

Paytm shares are trading in red on Thursday. The company stock dipped to its 52-week low mark of Rs 376.85 apiece on BSE exactly a year ago, ie 12 June 2024. Whereas, the company scrip touched its 52-week high mark of Rs 1,063 on 17 December, 2024. The stock value has declined nearly 8.63% year to date (YTD). However, its value has increased by 28.46% in three months. Thursday's decline in One97 Communications shares marks its biggest single-day fall since February last year.

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