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BUSINESS & TRADE MARCH 28, 2025 | The Indian Eye 30

Citi report sets Rs 1,000 target for

Paytm, says big changes in UPI could

make It biggest winner

Cabinet approves incentive scheme for promotion of low-value BHIM-UPI transactions

OUR BUREAU
New Delhi
A
Citi Research report has high-
lighted Paytm’s strong position
in India’s digital payments eco-
system, despite shifts in UPI subsidy
policies. While the government has
reduced the UPI incentive allocation
to Rs 15 billion for FY25, Citi sug-
gests that this move could pave the
way for the introduction of Merchant
Discount Rate (MDR) on large-tick-
et transactions, a development that
may work in favor of fintech players
like Paytm.
The report points out that Paytm
continues to maintain a stable mar-
ket share of 5.3 percent in UPI trans-
actions, reflecting its resilience in a
highly competitive industry.
The overall growth of UPI mer-
chant payments remains strong, re-
cording a 23 percent year-over-year
increase in February 2025. Citi’s find- With digital payments in India continuing to evolve, Paytm’s ability to adapt to regulatory changes and explore new revenue streams positions it
ings suggest that Paytm’s extensive
merchant network and its diversified as one of the strongest contenders in the fintech space (File photo)
suite of financial services allow it to
remain a key player in India’s digital As the government considers ue BHIM-UPI transactions will be maining 10 per cent of the admitted
payments revolution. potential MDR implementation implemented at an estimated cost of claim will be provided only when the
Citi analysts have set a target on large transactions, Paytm could Rs 1,500 crore. system uptime of the acquiring bank
price of Rs 1,000 per share for Paytm, stand to benefit significantly in the Only the UPI transactions upto will be greater than 99.5 per cent.
implying a potential upside of 31.1 years ahead. Rs 2,000 for small merchants are cov- This scheme will enable small
percent. ered under the scheme. merchants to avail of UPI services at
The report highlights that the The shares of One 97 Com- Incentives at the rate of 0.15 per no additional cost.
company’s strategic cost manage- cent per transaction value will be “As small merchants are
ment and expansion in financial ser- munications Ltd ended at Rs provided for transactions upto Rs price-sensitive, incentives would
vices could contribute to long-term 733.15, down 29.95 points or 2,000 pertaining to the category of encourage them to accept UPI pay-
profitability. small merchants. ment,” the government said.
With digital payments in India 3.92 per cent, dropping about For all quarters of the scheme, It will also supplement the gov-
continuing to evolve, Paytm’s ability 6 per cent during the trading 80 per cent of the admitted claim ernment’s vision of a less-cash econ-
to adapt to regulatory changes and amount by the acquiring banks will omy by formalizing and accounting
explore new revenue streams posi- session today. be disbursed without any conditions. for the transaction in digital form.
tions it as one of the strongest con- The reimbursement of the re- The incentive is paid by the
tenders in the fintech space. Meanwhile, the Union Cabinet maining 20 per cent of the admitted Government to the Acquiring bank
Despite policy adjustments, Citi chaired by Prime Minister Narendra claim amount for each quarter will (Merchant’s bank) and thereafter
Research views Paytm as a promising Modi on Wednesday approved the be contingent upon the fulfilment of shared among other stakeholders:
investment opportunity. Its well-es- ‘Incentive Scheme for promotion of the following conditions: Issuer Bank (Customer’s Bank), Pay-
tablished user base, robust technolo- low-value BHIM-UPI transactions 10 per cent of the admitted claim ment Service Provider Bank (facil-
gy infrastructure, and growing finan- Person to Merchant (P2M)’ for the will be provided only when the techni- itates onboarding of customers on
cial services segment create a strong financial year 2024-25. cal decline of the acquiring bank will UPI app / API integrations) and App
foundation for future growth. The scheme to promote low-val- be less than 0.75 per cent; and the re- Providers (TPAPs).

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