Paytm shares crashed 8% on Thursday as markets await a crucial decision on UPI MDR implementation, with the stock trading at ₹1,645.90, down 4.97% at 11:12 AM on October 8, 2026. The stock opened at ₹1,671 and touched an intraday low of ₹1,558.80, marking the lowest level seen by the stock since mid-August. The sharp selloff wiped off more than ₹10,970 crore from the company's market capitalisation, pushing it below the ₹1 lakh crore mark before recovering to trade 5% lower at ₹1,641 around 11 AM. According to The Times of India, the rollout of merchant discount rate (MDR) on select UPI transactions is expected to be postponed to January 2027 against the earlier date of October 15, with an announcement expected over the next couple of days. The committee comprises the Indian Banks' Association (IBA), the Payments Council of India (PCI), and representatives of banks, payment service providers (PSPs) and various associations. Industry sources said MDR is likely to be pushed to January 2027, as the festive season is around the corner and industry bodies have raised concerns about the levy at this time. The proposed postponement is linked to concerns around implementing the new fee structure during India's festive season, when digital payment activity typically rises sharply.
The latest decline was triggered by reports that authorities are considering delaying the introduction of merchant discount rates (MDR) on UPI transactions to January 1, 2027 from October 15, 2026. The NPCI last month announced a Merchant Discount Rate (MDR) on select Person-to-Merchant (P2M) UPI transactions above ₹2,000, effective October 15. However, the reported delay in the introduction of the fee beyond the festive season may have dampened sentiment of investors who were hoping for bumper gains for Paytm following the MDR introduction. Paytm was seen as one of the biggest beneficiaries in the MDR regime, positioned to capture the larger absolute opportunity, with analysts estimating FY28 UPI MDR revenue of as much as ₹1,160 crore. The delay would keep UPI payments free for merchants through the entire festival season till Christmas, amid pushback from retail traders' associations. According to Reuters, a final decision on delaying the rollout has yet to be taken by the National Payments Corporation of India, but is expected in the coming days. The proposed postponement is linked to concerns around implementing the new fee structure during India's festive season, when digital payment activity typically rises sharply.
The government is proposing a dedicated fund to support digital payments among small merchants and strengthen payment infrastructure in smaller centres. The fund would be used to subsidise and accelerate digital payment infrastructure in Tier 3 to Tier 6 centres, including the North-Eastern states, Jammu & Kashmir and Ladakh. In Tier 1 and Tier 2 centres, notified Central government schemes such as PM SVANidhi and PM Vishwakarma could also be covered. The fund is also intended to provide financial assistance to ecosystem players for merchant onboarding and encourage greater adoption of UPI transactions among existing small merchants. This support mechanism addresses concerns about the implementation of MDR fees on smaller merchants during the transition period.
Market experts are advising caution amid the current uncertainty, with Paytm shareholders advised to hold the scrip as it is still looking positive on the technical chart and its current support placed at ₹1,550 is expected to remain sacrosanct despite heavy sell-off. As per Live Mint, Mahesh M Ojha said that Paytm shares are falling due to the news reports about India mulling to delay the rollout of UPI MDR, and advised Paytm shareholders to hold the scrip and wait for an official announcement from the government. Sumeet Bagadia from Choice Broking advised existing Paytm shareholders to hold the scrip, maintaining a strict stop-loss at ₹1,550 on a closing basis, while fresh investors can buy Paytm shares at the current market price for the near-term target of ₹1,750 and ₹1,850, but are advised to maintain a strict stop-loss at ₹1,550 on a closing basis. The experts emphasize that any rebuttal from the government is expected to trigger a fresh rally in Paytm's share price, as the stock had rallied following the declaration of the UPI MDR rollout. The 0.4% MDR translates into ₹8 for every ₹2,000 spent, or ₹40 for every ₹10,000 paid using UPI, making it a significant revenue opportunity for digital payment platforms.
The impact has extended beyond Paytm, with other digital payment stocks also coming under pressure as investors reassessed the timing of the proposed MDR revenue opportunity. According to Reuters, Paytm shares fell as much as 7.6% during Thursday's trading, while One Mobikwik Systems declined 7.2% after reports of the possible delay. The proposed postponement is linked to concerns around implementing the new fee structure during India's festive season, when digital payment activity typically rises sharply. The possible delay would give merchants and the payments ecosystem additional time to prepare and allow UPI transactions to continue without the proposed MDR during the peak festive period. UPI is used by over 500 million people to buy everything from roadside cups of tea to iPhones in Asia's third-largest economy, with Walmart's PhonePe and Alphabet's GooglePay had about 80% market share by value of UPI transactions in August. The government recently ended nearly six years of fully free UPI payments by allowing MDR to be charged on certain merchant transactions.
