Paytm stock crashes 10%, sharpest intra-day fall in 16 months; here's why

Share price of One 97 Communications (Paytm) today

 

Shares of One 97 Communications, the parent company of Paytm, dipped 10 per cent to ₹864.20 on the BSE in Thursday's intraday trade amid heavy volumes after the Finance Ministry denied reports of merchant discount rate (MDR) being charged on Unified Payments Interface (UP) transactions.

 

The share price of the financial technology (fintech) company thus recorded its sharpest intra-day trade fall in the last 16 months. Earlier, on February 2, 2024, the stock price of Paytm had tanked 20 per cent in a single trading session, on the BSE.

 

At 09:32 AM, Paytm was trading 9 per cent lower at ₹872.20, as compared to 0.16 per cent rise in the BSE Sensex. The counter saw huge trading volume with a combined 7.35 million shares changing hands in the first 17 minutes of trade on the NSE and BSE. Meanwhile, the stock had bounced back 47 per cent from its March 2025 low of ₹652.30 on the BSE.

 

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Finance Ministry denies reports of fee on UPI transactions

 

The Finance Ministry on Wednesday rejected reports suggesting that a fee would be imposed on UPI transactions, calling them “completely false, baseless, and misleading”.  “Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading,” the ministry stated in a post on social media platform X. 

 

“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.”

 

MDR refers to the fee charged by banks or payment processing companies to merchants for processing credit and debit card transactions. In India, there's ongoing debate and discussion around MDR, particularly in relation to UPI transactions.

 

Media reports had earlier reported that the government of India was considering the introduction of  MDR charges on UPI transactions exceeding ₹3,000. 

 

Sentimentally negative for Paytm

 

The delay or non-introduction of MDR is sentimentally negative for Paytm.

 

Patym’s management in Q4 earnings call had said they believe that MDR on UPI should show up sooner rather than later.  “We do believe that based on what we're seeing in the current financial year, it could show up at any point of time. And that would bring monetization of QR deployment, acquiring and the consumer app both. And I think the numbers, et cetera, and when and how is something that continues to remain to be discussed or to be seen. And that will bring so-called monetization to UPI. We do believe that,” the management said.

 

According to Motilal Oswal Financial Services (MOFSL), the potential introduction of MDR on UPI is expected to significantly boost Paytm’s revenue and incentivize the company to drive market share gains in consumer payments. Paytm is likely to capture around 7-8 bp of the total MDR implemented, the brokerage firm had said in the Q4 result update.

 

Paytm reported a year of recovery in business metrics during FY25. Disbursement recovery is well on track, led by healthy disbursements in merchant loans. Gross Merchandise Value (GMV) also demonstrated steady state recovery, MOFSL said with a ‘Neutral’ rating on the stock.

 

Though Paytm reduced overall loss in FY25 mainly due to business consolidation and cost optimization, analysts at Emkay Global Financial Services in the Q4FY25 result update said that they expect it to turn net profit-positive in FY26 on the back of revenue acceleration from payment as well as the financial services business, higher treasury income on cash balance boosted by recent stake sales, and lower depreciation/ESOP cost. 

 

Additionally, potential re-introduction of MDR on high-value UPI transactions and receipt of payment aggregator and wallet license (either its own or on rent) should further boost its revenue/profitability and act as a stock catalyst, the brokerage firm had said.

 

About Paytm

 

Paytm is India's leading mobile payments and financial services distribution company. Pioneer of the mobile QR payments revolution in India, Paytm builds technologies that help small businesses with payments and commerce. Paytm’s mission is to serve half a billion Indians and bring them to the mainstream economy with the help of technology.