With UPI MDR Clarity, PhonePe Eyes IPO By March 2027

With greater clarity around the monetisation of UPI payments following’ the introduction of a new Merchant Discount Rate (MDR) framework, Walmart-backed fintech PhonePe is set to revive its initial public offering (IPO) plans, which were put on hold earlier this year.

Sources told Inc42 that the fintech startup is now targeting a public listing between February-March 2027.

“They have an almost 45% share of merchant payments. With greater clarity on the MDR regime, PhonePe is now looking to revise its IPO plans and could target a listing between February and March 2027,” the sources said. 

PhonePe will look to refile its IPO papers by the end of this year, seeking a valuation of $10 Bn, sources in the know told Inc42 on the condition of anonymity. 

Notably, the MDR framework was introduced by the Central government yesterday, bringing charges back on select UPI merchant transactions beginning October 15. The move marks a shift from the broad zero-MDR regime in place from 2020.

The charges will apply only to select transactions, with merchant UPI payments above ₹2,000 attracting a 0.4% MDR. However, person-to-person (P2P) transactions up to ₹2,000 will continue to remain free. Small merchants receiving up to ₹1 Lakh a month through UPI QR payments will also be exempt.

A lower MDR of 0.02%, capped at ₹300, will apply to capital market payments, including transactions involving stockbrokers, securities dealers, mutual funds and investment platforms.

The revised framework gives PhonePe, which has long been the UPI market leader, a greater clarity on monetising the service following years of no revenue. 

After filing for an confidential IPO in September 2025, PhonePe had filed its updated DRHP in March post receiving the SEBI’s approval for its OFS-only IPO. Existing investors including Walmart, Tiger Global and Microsoft were expected to sell shares.

The IPO was earlier expected to value PhonePe at $9 Bn-$10.5 Bn, with the offering size estimated to be in the range of $900 Mn-$1.5 Bn.

In its updated DRHP, PhonePe noted that UPI payments carried an MDR until 2020, allowing payment apps, aggregators and banks to earn revenue from transactions. The government later scrapped the MDR on UPI and RuPay payments to boost digital payment adoption.

PhonePe’s DRHP also cited calls from the Payments Council of India to review the zero-MDR regime for large merchants and RuPay debit card transactions. 

The startup said a “carefully structured MDR regime” could support investments in infrastructure, innovation and merchant acquisition, while cautioning that changes to the MDR framework could affect its financial performance.

PhonePe CEO Sameer Nigam has now welcomed the new framework, saying that the revenue generated from high-value merchant transactions could be reinvested in the UPI ecosystem.

Speaking to ANI earlier in the day, Nigam said around 70-80 Cr UPI transactions take place every day and that about 96% would remain free under the new framework. 

He said the 0.4% MDR would help the payments industry recover some operational costs and invest in merchant digitisation, marketing, innovation and new use cases.

“Now that a limited MDR has been introduced, we hope it will contribute to the further growth of the UPI ecosystem,” Nigam said.

On the financial front, PhonePe’s net loss widened 62% to ₹2,792 Cr in FY26 from ₹1,727.4 Cr in the previous fiscal, as higher employee costs, marketing expenses, ESOP costs and one-time write-offs offset growth in revenue.

Operating revenue rose 11.5% to ₹7,920.5 Cr from ₹7,105 Cr in FY25. Including other income of ₹467.4 Cr, total revenue grew 10% YoY to ₹8,387.9 Cr.

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