PhonePe Group Exits Account Aggregator Business

PhonePe Group has made the announcement that it will withdraw from the Account Aggregator sector and will instead collaborate with existing account aggregators in the marketplace. The company plans to return its NBFC-AA license to the Reserve Bank of India (RBI) and has commenced the process of winding down its account aggregator activities. In a press release, the company stated that it will soon contact its AA user base to communicate this decision and provide assistance in accordance with regulatory requirements.

Background of PhonePe’s Account Aggregator Operations

In 2023, the company, which is owned by Walmart, obtained in-principle approval from the RBI to operate as an Account Aggregator, followed by the final license awarded in June 2023. PhonePe expressed pride in their achievement of registering nearly 5 crore Indians on their AA platform within a span of less than two years. However, they acknowledged that competing priorities limited their ability to onboard a greater number of financial information providers (FIPs) onto their platform.

Competition in the Payment Aggregator Sector

In the realm of payment aggregators, PhonePe faced direct competition from companies such as Paytm, Razorpay, PayU, CCAvenue, and Cashfree. This shift comes closely on the heels of PhonePe’s decision to end its partnership with the payment orchestration platform Juspay, leading the company to offer payment gateway solutions through direct integrations moving forward.

PhonePe’s Market Position

As the leading player in the UPI ecosystem with nearly 50% market share, PhonePe reported over Rs 5,000 crore in revenue for FY24. Furthermore, the company’s losses saw a decrease of 28.6%, amounting to Rs 1,996 crore during this period.