Dialling up the news: PhonePe, one of India’s dominant digital payment platforms, announced its exit from the business of Account Aggregator. Instead of continuing its own operations in this segment, it was decided to partner with account aggregators already available in the market.
PC: The Hans India
Decision to Exit
On February 7, 2025, PhonePe released a statement about its exit from the Account Aggregator business. The company maintained that it was willing to surrender its Non-Banking Financial Company – Account Aggregator license in the Reserve Bank of India. They have already begun winding down their account aggregator business. According to a press release, PhonePe said it would reach out to its users and intimated them about the decision with the guidelines for moving ahead as per regulatory requirements.
Background of Account Aggregator Business
In 2023, PhonePe was given its first nod from RBI to act as an Account Aggregator. In June the same year, it finally achieved its license. The Account Aggregator system would assist users to maintain their various financial data kept at different banks and financial institutes under one portal. It permits the user to share their various financial information in a secure environment with service providers.
Although within less than two years, PhonePe successfully registered nearly 5 crore Indians on their platform, it still faced huge challenges. The company admitted that they could not onboard enough Financial Information Providers (FIPs) as expected. This is partly the reason why they opted out of the business venture.
Competition in the Market
In the Account Aggregator space, PhonePe remained under pressure to other players and Paytm. Razorpay and PayU companies are also prime players in a payment aggregator. Recently, Juspay will also end payment orchestration along with Phonepe. Instead of that, payments gateway solutions through direct provision only.
Financial Position
PhonePe is a dominant player in the Unified Payments Interface (UPI) ecosystem, holding nearly a 50% market share. For the financial year 2024, the company reported revenues exceeding Rs 5,000 crore. Additionally, PhonePe achieved a reduction in its losses by 28.6%, bringing them down to Rs 1,996 crore.
In summary, the exit from the Account Aggregator business marks a significant shift for PhonePe as it redirects its focus on other areas of growth. The company will partner with existing aggregators to streamline its offerings while continuing to serve its vast user base. As the digital payments landscape evolves, PhonePe will likely explore new opportunities to maintain its leadership position in the market.
