Paytm in Focus as Finance Ministry Denies Reports on UPI MDR Charges
- The government strongly denied reports of introducing MDR on UPI transactions, calling them false and misleading.
- The clarification affects companies like Paytm, which rely on UPI but face limited monetisation due to the absence of MDR.
- UBS views the non-introduction of MDR as sentimentally negative for Paytm, retaining a ‘Neutral’ rating with a Rs 1,000 target price.
Shares of One97 Communications Ltd, the parent company of Paytm, will remain in the spotlight today after the Ministry of Finance issued a categorical denial of reports suggesting the government is planning to impose a Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions.
In an official statement, the ministry described such reports as 'completely false, baseless, and misleading', adding that they generate 'needless uncertainty, fear and suspicion' among the public. It reaffirmed the government’s continued support for promoting digital payments through UPI and clarified that there are no plans to levy MDR on such transactions.
The clarification comes amid online speculation that the government may introduce MDR on high-value UPI payments. MDR is a fee that banks charge merchants to process digital payments. While it is still applicable on certain card transactions, MDR on UPI and RuPay card payments was waived in 2020 to accelerate digital adoption.
The development is significant for fintech companies like Paytm, which rely heavily on UPI infrastructure for their payment services. Market sentiment has been particularly sensitive to regulatory signals that could affect their monetisation models.
Brokerage firm UBS noted in a report that the ministry’s denial of MDR introduction is 'sentimentally negative' for Paytm. UBS maintains a ‘Neutral’ rating on One97 Communications with a target price of Rs 1,000.
The absence of MDR continues to be a challenge for payment companies seeking profitability in UPI services, and policy clarity on this front remains a key industry demand.
