PhonePe: Regulatory Developments and Financial Changes

PhonePe’s current trajectory towards its public listing sees the company adapting to multiple regulatory changes and shareholder liquidity events that have significantly impacted its revenue model over the preceding year. The latest draft red herring prospectus outlines that since 2023, PhonePe has experienced secondary share transactions totalling Rs 5,771 crore. A notable segment of this sum occurred in September 2025, when co-founders Sameer Nigam and Rahul Chari executed a secondary sale amounting to Rs 3,937 crore, with shares acquired by General Atlantic. This undertaking provided partial liquidity to the founders ahead of the impending IPO.

Changes in Payment Categories

In conjunction with these shareholder movements, PhonePe has implemented exits from specific payment categories due to regulatory measures. According to the draft red herring prospectus, the firm halted credit card payment services related to rent and associated categories in September 2025, following directives from the Reserve Bank of India (RBI) under the payment aggregator framework.

Financial Impact of Regulatory Changes

The ramifications of these adjustments are evident in the financial data. Revenue from the rent and related segments reached Rs 518 crore in the six months ending September 2025, whereas this segment had contributed Rs 1,262 crore in FY25. During FY25, rent-related payments composed 8.92% of PhonePe’s overall gross margins.

Exit from Real Money Gaming

PhonePe has also withdrawn from revenue avenues linked to real money gaming (RMG) following recent legislative modifications. As detailed in the draft red herring prospectus, the company stopped earning from advertising and payment gateway solutions associated with RMG after the implementation of the Promotion and Regulation of Online Gaming Act, 2025 on August 22, 2025. Hence, PhonePe’s financial reports from October 2025 will reflect no earnings from this segment.

Impact of RMG Revenue Changes

RMG revenue was documented at Rs 70 crore in H1 FY26, while the segment added Rs 245 crore in FY25. With both rent-related payments and RMG no longer part of its operations, PhonePe has effectively eliminated revenue streams that cumulatively contributed Rs 1,512 crore in FY25. This strategy reveals the company’s intention to pivot, as it gears up for its IPO while concentrating on its fundamental UPI payment and financial services.