The government’s recent announcement of a Merchant Discount Rate (MDR) on select high-value UPI merchant transactions could provide an additional monetisation opportunity for Rediff.com, an Indian internet and digital media company that is planning to enter the Indian primary market soon.
The framework, which comes into effect from October 15, ends zero-MDR pricing for large-ticket merchant UPI payments as the government moves to a tiered pricing model.
The MDR will apply to person-to-merchant UPI payments above ₹2,000. The charge will be paid by merchants, not consumers, and will be capped at ₹300 for transactions of ₹75,000 or more. Payments between individuals, as well as the vast majority of everyday merchant payments, will remain free.
RediffPay could benefit from new UPI monetisation opportunity
For Rediff.com, the timing could be favourable as it prepares to scale RediffPay, its consumer UPI app, alongside its planned listing. Rediff.com is authorised as a Third-Party Application Provider (TPAP) by NPCI, with Axis Bank as its Payment Service Provider bank, ANI reported.
The report, citing analysts, said payments of more than ₹2,000 accounted for barely 4% of person-to-merchant UPI volume in FY26 but roughly two-thirds of transaction value. This means the new fee, while narrow in scope, could affect a majority of UPI transaction value.
Under the new framework, the 0.4% MDR will be shared across the UPI ecosystem rather than accruing directly to the government or NPCI. Industry estimates, however, suggest that TPAPs on the payer side could capture roughly 8 basis points of the 40-basis-point pool. The final revenue-sharing arrangement and eligible transaction volumes for each app will determine the actual impact.
For RediffPay, this would mean earning a share of the MDR on qualifying high-value merchant payments, rather than receiving a flat 0.4% of all UPI transactions, the report noted. Brokerage estimates indicate the overall opportunity within the ecosystem.
Bernstein has estimated that the move could create a revenue pool of up to around ₹22,000 crore by FY28 for the entire ecosystem if a 40-basis-point MDR were to apply to roughly half of UPI transaction value. This figure is for the sector as a whole, not individual apps.
Meanwhile, Citi has estimated an annual opportunity of around ₹16,000-17,000 crore for all participants.
Paytm, Pine Labs among larger beneficiaries
RediffPay is not the only platform that could benefit from the new MDR framework. Listed fintech major Paytm and payments-infrastructure player Pine Labs, both established TPAPs and merchant-acquiring platforms, are expected to see a significant impact given their presence in UPI merchant transactions.
Another global brokerage, Jefferies, has estimated that the MDR move could unlock a revenue pool of up to roughly ₹5,000-10,000 crore for large payment platforms, including Paytm and Pine Labs, with TPAPs capturing around 8-12 basis points of the 40-basis-point fee.
Rediff.com IPO plans
According to company information, Rediff.com filed a confidential pre-DRHP with SEBI earlier this year, with news reports suggesting an approximate issue size of ₹600-800 crore, subject to regulatory approvals.
SEBI approved the IPO in August. AvenuesAI Limited, a listed fintech company, owns 82.66% of Rediff.com and has said in earlier management earnings calls and announcements that RediffPay is live and in production, with the platform being stabilised and scaled.
(With inputs from ANI)
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