In the high-stakes world of Indian fintech, PhonePe has long played the role of a company that rarely stumbled. With a registered user base of more than 650 million, it remains the largest player in the UPI ecosystem. Yet, as the company prepares for a public market debut, a closer reading of its IPO disclosures shows a string of costly experiments that have failed to deliver results beyond payments and lending.
Headlines often highlight the scale of PhonePe’s transaction volumes. The disclosures, however, point to a business that has pushed multiple new lines in parallel, with limited success outside its core offerings. The clearest signal of this strain appears in the details of its draft red herring prospectus.
In its filings, PhonePe does not present insurance distribution as a standalone business. Instead, it combines insurance with lending, despite building the insurance vertical since 2020. This approach makes it difficult to track the performance of insurance on its own.
Bundling insurance with lending allows the company to report stronger combined revenue and growth numbers. Lending has scaled rapidly, while insurance distribution has not shown similar traction. If insurance were performing at the level previously indicated by the company, it would appear as a separate segment in the disclosures.
Lending itself comes with limits. For most fintech firms, securing a nonbank financial company licence — a permit that allows firms to lend from their own balance sheets — is critical to improving margins and control. PhonePe applied for such a licence in 2021 and again in 2023, without success. It is now reported to be making a third attempt.
Without this licence, PhonePe operates a marketplace model. It originates customers, while partner banks retain a large share of the profits. The repeated failure to obtain approval has kept PhonePe in a distribution role rather than a lending institution. As the company nears its IPO, the renewed push highlights its reliance on regulatory clearance to improve profitability.
Limits to scaling non-payment services have also emerged due to regulatory changes. For several years, rent payments via credit cards formed a significant revenue stream. This category generated more than Rs 12.6 billion in the 2025 financial year, accounting for about 18% of total revenue. Regulators later curtailed such transactions, ending that income stream.
Real Money Gaming followed a similar path. PhonePe sought to monetise traffic through gaming-related advertising and payments. Regulatory changes under the Online Gaming Act reduced the viability of this model. Gaming contributed nearly Rs 2.5 billion in revenue in 2025. That figure has since fallen to zero.
Beyond regulatory actions, several internal ventures have struggled. One of the most visible was Pincode, a hyperlocal commerce app built on the government-backed ONDC network — an open digital network for retail transactions. Launched as a consumer-facing platform, Pincode aimed to shift users from payments to shopping. By late 2025, PhonePe exited the consumer app and repositioned the product as a merchant-focused service.
Stockbroking has shown similar limits. Share.Market, PhonePe’s brokerage platform, opened just over 1.2 million demat accounts by late 2025. That represents less than 0.2% of its registered users. The company has not disclosed further business metrics for the unit.
PhonePe also exited the Account Aggregator business. The Account Aggregator framework — a regulated system that enables user-consented sharing of financial data — was meant to support lending and insurance sales. PhonePe secured nearly five crore registered users on its platform within two years. However, it onboarded only 20 financial information providers out of about 100 in the ecosystem. By early 2025, the company surrendered its licence to the Reserve Bank of India.
The same pattern appears across newer segments. The “New Platforms” category, including wealth products and the Indus Appstore, contributes less than 1% of total revenue. Acquisitions such as WealthDesk and OpenQ have been integrated into the group, but their direct revenue contribution is not detailed.
As PhonePe approaches its IPO, the disclosures show a business still reliant on payments volume and lending distribution. Outside these areas, most expansion efforts have failed to scale or have been curtailed by regulation. Investors now face a clear question: whether PhonePe can build a diversified business, or whether it remains a large payments utility nearing its limits.
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.
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