Rediff.com's IPO plans may get a fresh UPI tailwind as new MDR regime kicks in
New Delhi, September 17
Rediff.com's upcoming initial public offering may find additional monetisation avenues as a result of the government's decision to levy a Merchant Discount Rate of 0.4% on select high-value UPI merchant transactions, market analysts said after the new regime was announced on Tuesday.
The framework, which comes into effect from October 15, discontinues a zero-MDR for large-ticket merchant UPI payments as the government moves to a tiered pricing model. P2P transfers and merchant payments worth up to Rs 2,000 continue to be free, the MDR is capped at Rs 300 for transactions of Rs 75,000 and above, and small merchants meeting specified criteria continue to be exempt.
For Rediff.com, the timing appears to be fortuitous as it prepares to scale RediffPay, the consumer UPI app, in tandem with a planned listing. Rediff.com is authorised as a Third-Party Application Provider (TPAP) by NPCI, with Axis Bank as its Payment Service Provider bank.
Analysts note that payments of more than Rs 2,000 make up barely 4% of person-to-merchant UPI volume in FY26 but account for roughly two-thirds of transaction value, meaning the new fee, while narrow in scope, impacts the majority of flows.
Under the new framework, the 0.4% MDR is shared across the UPI ecosystem rather than accrued directly to the government or NPCI. Industry estimates, however, suggest TPAPs on the payer side could capture roughly 8 basis points of the 40-bps pool, but the final revenue-sharing arrangement and eligible transaction volumes for each app will dictate the impact. For RediffPay, this would mean a cut of MDR on qualifying high-value merchant payments, rather than a flat 0.4% of all transactions.
Brokerage estimates are indicative of the overall opportunity within the ecosystem. Bernstein has estimated this could create a revenue pool of up to around Rs 22,000 crore by FY28 for the entire ecosystem, if a 40-bps MDR were to apply to roughly half of UPI transaction value, a figure for the sector overall, not individual apps. Meanwhile, Citi has estimated an annual opportunity of around Rs 16,000-17,000 crore for all participants.
RediffPay is not the only winner in sight, listed fintech major Paytm and payments-infrastructure player Pine Labs, both established TPAPs and merchant-acquiring platforms, are expected to see the most gains, as they are seen as dominant players in UPI merchant transactions. Brokerage Jefferies has estimated the MDR move could unlock a revenue pool of up to roughly Rs 5,000-10,000 crore for large payment platforms including Paytm and Pine Labs, with TPAPs capturing around 12-8 bps of the 40-bps fee. Shares of both companies have seen an uptick since reports started circulating of an impending MDR notification, similar to peers Mobikwik and Rediff's parent company AvenuesAI Limited.
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 Rs 600-800 crore, subject to regulatory approvals. SEBI approved the IPO in August. AvenuesAI Limited, a listed fintech, owns 82.66% of Rediff.com and has noted RediffPay is live and in production, with the platform being stabilised and scaled, in its earlier management earning calls and announcements.
— ANI
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