Rediff.com’s proposed initial public offering (IPO) could receive an added boost from the government’s decision to introduce a Merchant Discount Rate (MDR) on certain high-value UPI merchant transactions. Market analysts said the new framework may open another monetisation opportunity for RediffPay, the company’s consumer-focused UPI application, as Rediff.com prepares for a potential public listing.
New MDR framework begins October 15
The revised UPI pricing structure is scheduled to take effect on October 15. Under the framework, the earlier zero-MDR arrangement for large-value merchant transactions will end, with a tiered pricing system being introduced.
Person-to-person (P2P) transactions will remain free, while merchant payments of up to Rs 2,000 will also continue without MDR. For transactions of Rs 75,000 or more, the MDR has been capped at Rs 300. Certain smaller merchants that meet the specified eligibility conditions will remain outside the new charge structure.
RediffPay positioned for merchant payments
The timing of the policy change could be relevant for Rediff.com as it works to expand RediffPay alongside preparations for its proposed IPO. Rediff.com has received authorisation from the National Payments Corporation of India (NPCI) to operate as a Third-Party Application Provider (TPAP), while Axis Bank serves as its Payment Service Provider bank.
The company’s position in the UPI ecosystem could allow RediffPay to participate in the revenue generated from eligible high-value merchant payments. However, the actual financial benefit will depend on the final revenue-sharing structure and the volume of transactions that qualify under the new rules.
High-value transactions account for most UPI value
Analysts have pointed to the relatively small number of high-value transactions compared with their contribution to overall UPI value. Payments above Rs 2,000 are estimated to represent only about 4% of person-to-merchant UPI transaction volume in FY26. However, those transactions account for close to two-thirds of the total transaction value.
The new MDR therefore applies to a limited portion of transaction volumes while potentially covering a substantial share of the money moving through the merchant-payment ecosystem.
Revenue will be shared across the ecosystem
The 0.4% MDR will not flow directly to the government or NPCI. Instead, the revenue is expected to be distributed among participants in the UPI ecosystem. Industry estimates indicate that payer-side TPAPs could potentially receive around 8 basis points from the 40-basis-point MDR pool.
The exact allocation, however, will depend on commercial arrangements and the number of qualifying transactions processed through individual platforms. For RediffPay, this means the opportunity would relate specifically to eligible high-value merchant payments rather than applying to its entire UPI transaction base.
Large payment platforms also stand to benefit
RediffPay is not the only platform expected to gain from the policy change. Established players such as Paytm and Pine Labs, which have significant positions across UPI and merchant payments, are also expected to participate in the emerging revenue pool.
Bernstein has estimated that the new structure could potentially generate as much as Rs 22,000 crore in annual revenue for the wider payments ecosystem by FY28 under certain assumptions. Citi has separately estimated the overall opportunity at around Rs 16,000-17,000 crore. These estimates refer to the industry as a whole and not to individual companies.
Jefferies has put the potential revenue pool for major payment platforms, including Paytm and Pine Labs, at roughly Rs 5,000-10,000 crore, depending on transaction volumes and revenue-sharing arrangements.
Rediff.com IPO preparations continue
Rediff.com submitted a confidential pre-DRHP to the Securities and Exchange Board of India (SEBI) earlier this year. Media reports have indicated a proposed issue size of approximately Rs 600-800 crore, although the final structure remains subject to regulatory processes. SEBI approved the IPO in August.
Rediff.com is majority-owned by listed fintech company AvenuesAI Limited, which holds an 82.66% stake. AvenuesAI has previously said RediffPay is live and operational, with the platform undergoing stabilisation and expansion as the company develops its payments business.