Global Brokerage Sees Merchant Charges Boosting Paytm’s Profitability from FY28
Global investment research and brokerage firm Bernstein has reaffirmed its ‘Outperform’ rating on Paytm parent One97 Communications and raised its target price to Rs 2,200 from Rs 1,500, citing the potential introduction of Merchant Discount Rate (MDR) on select UPI merchant transactions.
The revised outlook follows recent government signals indicating that while UPI transactions will remain free for consumers, merchant charges on certain transactions could return as part of a sustainable revenue model for the payments ecosystem.
UPI MDR Now Part of Bernstein’s Base Case
Earlier treated as an optional upside, Bernstein has now incorporated UPI MDR into its base-case financial projections starting FY28.
The brokerage assumes an MDR of approximately 35 basis points on a selected segment of UPI person-to-merchant (P2M) transactions.
Based on this assumption, Bernstein expects Paytm to retain around 3–4 basis points as incremental net payment margin despite competitive pressure in merchant acquiring.
EBITDA Could Rise Sharply
According to Bernstein’s estimates, the introduction of MDR could significantly strengthen Paytm’s profitability over the coming years.
The brokerage projects incremental EBITDA of:
- Rs 1,320 crore in FY28E
- Rs 1,690 crore in FY29E
- Rs 2,160 crore in FY30E
It has also increased its FY30 estimated Earnings Per Share (EPS) by nearly 30%, taking the forecast to Rs 106.
Payments Business Expected to Scale Further
Bernstein expects Paytm’s Gross Merchandise Value (GMV) to witness strong expansion over the next few years.
According to its projections, GMV could grow from Rs 30.9 lakh crore in FY27E to approximately Rs 56.6 lakh crore by FY30E, driven by increasing digital payment adoption and merchant transactions.
The brokerage believes the key question has now shifted from whether MDR will return to how much of the merchant fee Paytm can ultimately retain amid rising competition and pricing pressure.
Government Clarifies Consumer Transactions Will Remain Free
The optimistic outlook comes after the government clarified that UPI users will not be charged for making payments.
Officials stated that any MDR, if implemented, would apply only to select merchant transactions above a specified threshold, while consumer-to-merchant digital payments would continue to remain free for users.
The government also highlighted the need for a sustainable revenue model to support continued investments in UPI infrastructure, cybersecurity, fraud prevention, and payment innovation.
Paytm Continues to Be a Leading UPI Player
According to the latest NPCI data for June 2026, Paytm remained the third-largest UPI application in India.
During the month, the platform processed:
- 1.80 billion UPI transactions
- 7.92% market share by transaction volume
- 6.66% market share by transaction value
- Rs 1.93 lakh crore worth of transactions
Stock Yet to Reclaim IPO Price
Paytm made its stock market debut in July 2021 with an issue price of Rs 2,150.
Although the stock has gained nearly 20% in 2026, it is currently trading at around Rs 1,558, still below its IPO listing price.
Bernstein’s revised target price of Rs 2,200 is among the most optimistic forecasts for the company and reflects expectations that a structured MDR framework could materially improve Paytm’s long-term earnings profile.
