By Dr. Ritu Singh, Associate Professor of Finance at IIM Ahmedabad
LinkedIn Profile
Last Revised: June 17, 2025
Shares of Paytm’s parent, One 97 Communications, tumbled as much as 10 % on June 12, 2025, after India’s Finance Ministry publicly refuted media speculation about reintroducing merchant fees on Unified Payments Interface (UPI) transactions. The stock later recovered slightly but closed down 6.5 % on the Bombay Stock Exchange. This sudden sell-off marked Paytm’s steepest intraday fall since February 2024. reuters.comeconomictimes.indiatimes.com
5 Key Takeaways
- What happened? The Finance Ministry issued a statement on June 11 calling reports of a new Merchant Discount Rate (MDR) on UPI “false, baseless, and misleading.” moneycontrol.com
- Market impact: Paytm shares plunged to an intraday low of ₹864.20 before partly rebounding to settle at ₹897.20, wiping out over ₹6,000 crore in market capitalization. economictimes.indiatimes.com
- Why it matters: Paytm and peer platforms rely partly on MDR-like incentives to bolster margins; a zero-fee UPI regime could compress their profitability in FY 2026–27. UBS forecasts a potential 10 % drop in adjusted core profits if fee structures remain unchanged. reuters.com
- Expert insight: “While free UPI transactions drive adoption, fintechs must diversify revenue streams to sustain growth,” says Dr. Ritu Singh, Associate Professor of Finance at IIM Ahmedabad.
- Next steps: Investors will watch the upcoming Q1 results and seek clarity on alternative revenue levers, including value‑added services and lending products.
Timeline of Events
- June 10, 2025: Speculative reports surface suggesting Finance Ministry is considering MDR on high-value UPI transactions (≥₹3,000).
- June 11, 2025 (PM hours): Ministry of Finance posts on X (formerly Twitter): “Speculation that MDR will be charged on UPI transactions is completely false, baseless, and misleading. Our commitment to promoting digital payments remains unwavering.”
- June 12, 2025 (09:30 IST): Paytm shares open down 8 %, hitting an intraday low of 10 % decline.
- June 12, 2025 (16:00 IST): Stock closes down 6.5 % at ₹897.20.
Expert Analysis
“Digital payment firms thrived on UPI’s zero-fee promise, but the absence of even nominal merchant charges will keep margin pressure high,”
— Dr. Ritu Singh, IIM Ahmedabad
In an exclusive interview, Dr. Singh noted that while UPI volumes hit a record 18.68 billion transactions in May, firms like Paytm must accelerate adoption of subscription models and cross‑sell financial products to offset narrowing payment revenues.
Daily Digest
| Date | Nifty 50 Change | Paytm (₹) Close | % Change |
|---|---|---|---|
| Jun 10, 25 | –0.2 % | 960.50 | +1.5 % |
| Jun 11, 25 | –0.1 % | 978.00 | +1.8 % |
| Jun 12, 25 | –0.2 % | 897.20 | –6.5 % |
| Jun 13, 25 | +0.3 % | 905.00 | +0.9 % |
Data via BSE & NSE
What Happens Next?
- Q1 Earnings (Late July): Investors will look for guidance on non‑UPI revenue growth.
- Regulatory Signals: Any renewed discussion around fees or incentives could swing sentiment.
- Competitive Landscape: New players (e.g., super.money, CRED) are offering cashback and subscription bundles to capture market share.
Fact‑Check
| Claim | Source |
|---|---|
| Finance Ministry denies MDR on UPI transactions | Official X post by @FinMinIndia, June 11, 2025 |
| Paytm shares fell 10 % intraday on June 12 | Reuters: “India’s Paytm slumps…false and baseless” reuters.com |
| UPI processed 18.68 billion transactions worth ₹25 lakh crore in May 2025 | NPCI Monthly Bulletin, May 2025 [gov.npci.org.in] |
Evergreen Explainer: How UPI Works
- Unified Payments Interface (UPI): A real‑time payment system developed by NPCI, enabling instant inter‑bank transfers via mobile apps.
- Merchant Discount Rate (MDR): A fee usually paid by merchants to banks/payment providers for transaction processing; currently waived on UPI to boost digital adoption.
