PhonePe’s long-awaited public-market ambitions are gaining renewed attention as India’s UPI ecosystem moves towards a new monetisation model. With the introduction of a limited Merchant Discount Rate (MDR) on higher-value merchant payments, the fintech major sees a potential improvement in the economics of its payments business — a development that could also influence the timing of its proposed IPO.
PhonePe CEO and co-founder Sameer Nigam told Moneycontrol in an exclusive interview that the MDR framework would bring the company closer to an IPO filing from a business perspective. Nigam, however, did not commit to a specific filing date and indicated that other factors would also play a role in determining the timeline.
UPI’s Business Model Enters a New Phase
The development follows NPCI’s decision to introduce a 0.4% MDR on eligible UPI merchant transactions above ₹2,000 from October 15, 2026. The charge will be capped at ₹300 per transaction, while person-to-person payments and several lower-value transactions will remain outside the MDR framework.
The change is significant for India’s payment companies because UPI has historically operated without a direct MDR-based revenue model. The new framework creates an additional commercial layer around high-value merchant transactions while keeping the majority of everyday UPI payments free.
For PhonePe, which has built one of the country's largest UPI payment networks, the change could have a meaningful impact on the revenue profile of its payments operations.
Revenue Growth Adds to the IPO Narrative
PhonePe’s FY26 financial performance provides another important element to the story. The company reported consolidated revenue of ₹7,920 crore for the financial year, compared with ₹7,115 crore in FY25, representing an 11% increase.
The Bengaluru-headquartered fintech processes around 11.5 billion transactions every month, with the total transaction value exceeding ₹14 lakh crore, according to Moneycontrol. PhonePe also holds more than 45% of the UPI market, giving it significant exposure to any changes in the economics of UPI merchant payments.
Under the new MDR structure, UPI apps are expected to receive a share of the collections. Moneycontrol reported that payment applications could receive 20% of MDR collections, creating a potential new revenue stream for large platforms such as PhonePe.
IPO Plans Remain on the Radar
PhonePe’s IPO journey has already seen changes in timing, with the company previously putting its listing plans on hold amid geopolitical uncertainty and investor sentiment.
The latest MDR development could now give the company additional visibility into the future economics of its core payments business. Nigam’s comments to Moneycontrol suggest that the company is evaluating this change as part of its broader IPO considerations rather than treating MDR alone as a trigger for an immediate filing.
The CEO has indicated that PhonePe could potentially list during the current financial year, but the company has not announced a definitive filing or listing schedule.
What the MDR Shift Means for PhonePe
The significance of the new MDR regime extends beyond a single revenue line. For PhonePe, the change comes as its payments platform reaches substantial scale and the company continues to build businesses across financial services and digital commerce.
The new framework could therefore provide investors with another metric to assess the commercial potential of India's largest UPI platforms as the ecosystem moves beyond its earlier zero-MDR model.
For PhonePe, the immediate focus will be on how the new revenue mechanism performs once it becomes operational. If the economics develop as expected, it could strengthen the financial backdrop against which the company evaluates its next step towards the public markets.
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