A sharp sell-off in Paytm’s stock sent shockwaves across the market early Wednesday. But a quick and firm rebuttal from the Finance Ministry helped stem the bleeding. Shares regained some ground, though the sting of panic lingered.
Earlier in the day, the digital payments giant saw its stock plunge more than 10 percent. Investors reacted to rumors that the government would start charging a merchant discount rate (MDR) on UPI transactions—a move that could’ve shaken the very core of India’s zero-fee digital payment structure.
Morning Panic Wipes Billions in Minutes
It all happened fast. Too fast, actually.
In the opening hours of June 12, Paytm’s share price nosedived to ₹864 apiece. That marked a brutal 10% crash from the previous close and briefly made it the biggest loser on the Nifty Midcap 100 index.
Investors were reacting to unconfirmed reports claiming that UPI transactions above ₹3,000 could soon attract MDR charges. The idea spooked the market.
The worry was simple: if digital payments start costing merchants money, they may nudge customers toward cash or other modes, and platforms like Paytm could take a direct hit.
By late morning, things cooled. Paytm clawed back some losses and was trading at ₹899—still down around 6%, but far from the morning’s worst.
Finance Ministry Steps In, Squashes the Rumors
Just before noon, the Finance Ministry issued a statement that cut through the noise.
“Reports claiming MDR on UPI transactions are completely false, baseless, and misleading,” it said bluntly, putting to rest a rumor that had set off a ₹5,000 crore wipeout in Paytm’s market value in under two hours.
The ministry didn’t stop there. Officials made it crystal clear that the government has no intention of imposing MDR on UPI payments—now or anytime soon.
It was enough to put some wind back into Paytm’s sails, even if not enough to erase all of the morning’s panic.
A Look Back at the Spark
Earlier reports speculated that the Indian government was mulling the reintroduction of MDR for UPI payments exceeding ₹3,000. Some even claimed that lenders might get the green light to charge MDR not just on per-transaction basis, but across merchant turnover slabs.
Now here’s the twist: just days before, Paytm shares had surged to a three-month high of ₹978 after similar chatter suggested MDR might actually benefit platforms by helping monetize payments.
• On June 10, the stock touched ₹978 apiece
• On June 12, it fell to ₹864 at its lowest point
• By midday June 12, it partially recovered to ₹899
That’s a nearly ₹115 swing in just 48 hours.
It’s a clear sign of how sensitive the fintech space remains to regulatory chatter—even if it’s unfounded.
Why MDR Still Matters to the Sector
To understand why this issue hits a nerve, you’ve got to rewind a bit.
UPI—India’s real-time payment rail—has grown explosively in recent years. It processed over 13 billion transactions in May 2025 alone, according to NPCI data. But here’s the catch: there’s zero MDR on UPI payments. Platforms earn close to nothing on these transactions.
Banks and payment firms have long argued that this model is unsustainable.
Here’s a quick breakdown of how MDR discussions have affected key players:
| Company | Business Model Focus | Impact if MDR Returns |
|---|---|---|
| Paytm | Payments + lending | Positive (if allowed) |
| PhonePe | Payments only | Mixed effect |
| Banks | Infrastructure-heavy | Strongly positive |
| Small Merchants | High UPI usage | Strongly negative |
While firms like Paytm might welcome MDR’s return under the right rules, most merchants are strongly against it. And politically, it’s a hot potato.
So, it’s no wonder the Finance Ministry acted fast.
Market Still On Edge, Volatility Likely to Continue
Even after the clarification, some jitters remain. Paytm’s recovery wasn’t complete, and trading volumes stayed higher than average.
Analysts said the event reinforced just how vulnerable the market is to policy flip-flops—or even rumors of one.
“This sort of price action shows that regulatory uncertainty is still the biggest risk facing fintech stocks,” said a Mumbai-based trader at a domestic brokerage firm. “There’s no revenue from payments, and every few months there’s some headline that swings the stock double digits.”
Another investor called it “headline roulette.”
Paytm’s Bigger Picture: Still Choppy, But No Freefall
Let’s not forget—Paytm has already been under pressure this year.
Earlier in 2025, the Reserve Bank cracked down on Paytm Payments Bank, barring it from accepting fresh deposits and top-ups. That blow forced the company to revamp its product offerings and find new banking partners.
In the weeks since, the stock has slowly crawled back. But it’s still nowhere near its 2021 listing price of ₹2,150.
Now, even false headlines are enough to send it tumbling.
Still, Wednesday’s mini crash may serve as a reminder: sentiment can swing faster than fundamentals.
