PhonePe will hire more than 20,000 frontline sales personnel on its own rolls and deploy over 5 million payment devices over the next 12 months as it steps up merchant expansion across India, particularly in smaller towns and rural areas, following the introduction of a merchant discount rate (MDR) on specified UPI transactions.

Around 50% of the devices, which include SmartSpeakers and point-of-sale (PoS) machines, will be placed in rural India, including tier-6 towns, the company said in a statement on Thursday. The new sales force will sign up merchants in smaller towns and villages, complete their KYC, install payment devices and provide ongoing support.

PhonePe said the MDR framework announced by the government and the National Payments Corporation of India (NPCI) this month allows it to ‘take a long view’ and invest in merchant expansion.

The company also pointed to a dedicated small-merchant fund, which will receive 5% of MDR collections, saying it would support expansion in deep rural geographies, including tier-6 towns and villages. The fund’s detailed design is to be finalised in consultation with the Reserve Bank of India (RBI) within three months.

From October 15, a 0.4% MDR will apply to specified person-to-merchant (P2M) UPI transactions above `2,000, capped at `300 for payments of `75,000 and above. Small merchants whose monthly UPI QR receipts stay under `1 lakh remain exempt. About 96% of P2M transactions are expected to remain unaffected, while the roughly 4% that will attract MDR account for about 67% of the total value of merchant payments.

The revenue-sharing structure, finalised by the NPCI-led UPI and Services Steering Committee, gives issuer banks 40% of the MDR, merchant acquirers 30%, UPI apps such as PhonePe 20% and the apps’ partner banks 10%. Citi estimates the MDR could create an annual revenue pool of `10,000-20,600 crore for banks, UPI apps and payment aggregators, with about a quarter going to UPI app providers.

The announcement came on the day NPCI managing director and CEO Dilip Asbe said at the SBI Banking & Economics Conclave that revenue from the new structure would go back into the ecosystem, including soundboxes and AI-based solutions. He added that he did not foresee any major impact on UPI volumes or value.

PhonePe said the four labour codes are also helping it hire faster on its own rolls. The codes, which came into effect on November 21, 2025, rationalised 29 existing central labour laws into four codes and, according to the company, have streamlined compliance for onboarding a large on-roll workforce.

The company said a digitally active, KYC-compliant merchant base would give lending institutions greater visibility into business activity, helping eligible merchants access formal credit and other financial services.

As of August 2026, PhonePe had over 720 million life-till-date registered users and a merchant acceptance network of more than 50 million merchants.