India’s government is denying rumors of new fees on the country’s popular instant payment system.
“Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading,” the Indian Ministry of Finance wrote in a post on X Wednesday (June 11), referring to the idea of the “merchant discount rate” being applied to the country’s United Payments Interface system.
“Such baseless and sensation-creating speculations cause needless uncertainty, fear and suspicion among our citizens,” the ministry said. “The government remains fully committed to promoting digital payments via UPI.”
According to a report from Reuters, the ministry’s announcement was bad news for Indian digital payments company Paytm, whose stock fell as much as 10% Thursday (June 12).
As the report noted, merchants in India pay fees to banks or payment service providers like Paytm for transactions, though there are no fees on UPI payments.
The news that these fees won’t be introduced is “sentiment negative for Paytm,” brokerage UBS said, per the Reuters report. UBS added that Paytm’s adjusted core profits could fall more than 10% in fiscal years 2026 and 2027 if increased incentives are not realized.
Paytm has been dealing with a series of misfortunes since last year, when the Reserve Bank of India — the country’s banking regulator and central bank — announced it was suspending business at Paytm Payments Bank after an audit found “persistent noncompliances and continued material supervisory concerns.”
Interviewed by Bloomberg News at the World Economic Forum in Davos Switzerland in January, Paytm CEO Vijay Shekhar said earlier this year that he hopes the situation is a temporary one.
“As far as the bank is concerned, which is a separate entity, now we are pretty much at an arm’s length so it should get sorted out soon,” Sharma said. “We’ve learnt our lessons and we’ve dramatically changed our approach towards the business.”
In other instant payments news, PYMNTS wrote earlier this week about efforts by financial institutions and central banks around the world to promote and implement “faster, more streamlined payment capabilities.”
In the U.S., for example, “institutions managing substantial assets are overhauling their payment infrastructure by adopting cloud-based platforms to process various transaction types, including real-time payments, across key networks like the RTP® Network and the FedNow® Service,” the report said.
