Walmart-backed fintech PhonePe is targeting an initial public offering (IPO) between February and March 2027, following new clarity on the Merchant Discount Rate (MDR) framework for UPI payments, according to inc42.com. The company aims to refile its IPO documents by the end of this year, seeking a valuation of $10 billion.
The Central government introduced a revised MDR framework on September 15, 2026, which reinstates charges on select UPI merchant transactions starting October 15. Under the new rules, merchant UPI payments above ₹2,000 will attract a 0.4% MDR, while person-to-person transactions up to ₹2,000 remain free. Small merchants receiving up to ₹1 lakh monthly via UPI QR payments are exempt, and a lower MDR of 0.02%, capped at ₹300, applies to capital market payments. PhonePe holds nearly 45% of the merchant payments market, positioning it to benefit from the updated regime, inc42.com reported.
The MDR framework shift marks a departure from the zero-MDR regime that had been in place since 2020, which limited monetisation opportunities for UPI-based payments. The new charges on higher-value transactions could enhance revenue streams for fintech players like PhonePe, which dominates merchant payments. The company’s $10 billion valuation target aligns with its market share and the expected impact of the MDR changes on its business model, according to inc42.com.
PhonePe’s IPO filing is expected by the end of 2026, with the public listing planned for early 2027. The MDR framework takes effect on October 15, 2026, setting the stage for PhonePe’s revised monetisation strategy and public market debut, inc42.com reported.