Summary:
PhonePe may revisit its IPO plans after NPCI introduced a 0.4% MDR on eligible UPI merchant transactions above ₹2,000 from October 15. The framework could improve payment monetisation visibility, although PhonePe’s listing timing, valuation and profitability remain uncertain.
PhonePe is considering alternatives to restarting its initial public offering (IPO) after the National Payments Corporation of India (NPCI) introduced a Merchant Discount Rate (MDR) framework for select UPI transactions. The new rules give more clarity on monetisation opportunities for digital payment companies providing a potential pathway for PhonePe to consider its listing on a public market again.
PhonePe had halted its IPO plans due to global market volatility and geopolitical uncertainties. The company is now expected to update its financial metrics and reassess the timing of a potential listing following the introduction of a structured MDR regime. There is no immediate timeline for the IPO, however the regulatory clarity on transaction fees has improved visibility for payment platforms.
Previously before putting its IPO plans on pause, PhonePe was estimated to target a valuation of around $9 billion to $10.5 billion. The company’s future valuation will depend on factors such as revenue growth, profitability, market share and the impact of the new UPI monetisation framework.
New MDR Rules Present A Revenue Opportunity For UPI Players
NPCI has announced a 0.4% MDR on person-to-merchant (P2M) UPI transactions of above ₹2,000 from October 15, 2026. The charge will apply to merchants accepting larger-value UPI payments with person-to-person (P2P) transactions continuing to remain free.
For transactions of ₹75,000 and above the MDR will be capped at ₹300 per transaction. About 96% of merchant UPI transactions will remain unaffected with payments up to ₹2,000 continuing to exist outside of the MDR framework.
The MDR revenue will be distributed among participants in the payment ecosystem, including banks, payment service providers and UPI application providers. The move is aimed at supporting investments in technology infrastructure, cybersecurity and expansion of the digital payments ecosystem.
Reasons Why PhonePe Shares Or Valuation Expectations Could Gain After The Development
The introduction of MDR provides payment platforms with a potential revenue stream from high-value merchant transactions. Previously, UPI merchant payments did not bear direct transaction fees limiting monetisation opportunities for payment applications despite their large transaction volumes.
The development could strengthen the investment narrative for companies preparing for public markets as investors can now assess a clearer path towards revenue generation from UPI transactions. Industry estimates suggest that the MDR framework could create a significant revenue opportunity for payment ecosystem participants, dependent on eligible transaction volumes and revenue sharing arrangements.
However, the impact on valuations will depend on how much of the MDR pool individual platforms receive and if the additional revenue translates into sustainable profitability.
Challenges Before IPO Remain
Despite improved regulatory clarity, PhonePe will need to demonstrate consistent financial performance before proceeding with a listing. Factors that investors may look into include transaction growth, merchant adoption, operating costs and the company’s ability to convert scale into profits.
UPI has become one of the world’s largest digital payment networks. In July 2026, India processed 2,366 crore UPI transactions worth ₹29.9 lakh crore, highlighting the scale of the ecosystem.
The return of MDR on select transactions change the economics of the sector, but the long-term impact will depend on adoption patterns, regulatory developments and competition among payment platforms. PhonePe’s potential IPO journey will therefore be closely linked to how effectively it benefits from the evolving UPI business model.
