Paytm shares tumble 10% as govt dismisses reports on merchant discount rates

Shares of Paytm experienced a sharp decline, tumbling over 10%, after the central government dismissed media reports suggesting it was considering levying a Merchant Discount Rate (MDR) on UPI transactions above a certain value. The stock had previously surged on speculation that an MDR regime would be introduced, which would have created a new revenue stream for payment service providers like Paytm. However, the government clarified that it has no plans to impose such charges, reaffirming its commitment to keeping UPI a free-to-use platform to promote digital payments. The quick reversal in the stock's fortune highlights the market's sensitivity to regulatory news concerning the payments industry. The government's firm stance means that payment companies will need to continue exploring alternative monetization strategies rather than relying on transaction fees from the highly popular UPI network for their revenue.