PhonePe to Exit Account Aggregator Business, Will Partner with Existing Players

Digital payments giant PhonePe announced its decision to exit the Account Aggregator (AA) business, opting instead to partner with existing AAs in the market. The company plans to surrender its NBFC-AA license to the Reserve Bank of India (RBI) and has begun winding down its AA operations.

Rapid Growth but Strategic Shift

Despite registering nearly 50 million Indians on its AA platform in less than two years, PhonePe cited challenges in onboarding financial information providers (FIPs) as a key factor in its decision. "Due to competing priorities, we have not been able to onboard as many financial information providers to our platform as we would have liked," the company stated in its press release.

The move comes just months after the company received its final AA license from the RBI in June 2023, following an in-principle approval earlier that year.

Recent Strategic Changes

This development follows PhonePe's recent decision to end its partnership with pJuspay, a payment orchestration platform. Instead, PhonePe will offer payment gateway solutions through direct integrations. PhonePe competed with major players in the payment aggregator space, including Paytm, Razorpay, PayU, CCAvenue, and Cashfree.

Strong Financial Performance

PhonePe continues to dominate the UPI ecosystem with approximately 50% market share. The Sameer Nigam-led company reported impressive financial results for FY24:

• Revenue exceeded Rs 5,000 crore
• Losses decreased by 28.6% to Rs 1,996 crore

The company has announced it will reach out to its AA user base to inform them of the decision and provide assistance following regulatory guidelines.