PhonePe exits account aggregator business; will now partner with AAs
Walmart-backed PhonePe will surrender its non-banking financial company account aggregator license to the RBI and transition to a partnership model with existing AAs.
PhonePe, one of India’s largest fintech firms, is exiting the account aggregator (AA) business less than two years after securing its license.
The Walmart-backed company will surrender its non-banking financial company account aggregator (NBFC-AA) license to the Reserve Bank of India (RBI) and transition to a partnership model with existing AAs.
The decision comes despite PhonePe registering nearly 50 million users on its AA platform. However, the company admitted it struggled to onboard financial information providers (FIPs) at the pace it had anticipated, even as other AA players expanded rapidly.
“The AA ecosystem itself is flourishing today, and many of the other players are growing exponentially,” the company said in a statement. "Given competing priorities, we have decided to exit the business and instead partner with other AAs in the market."
PhonePe clarified that the move will not affect the employee strength and workers will be absorbed in other verticals.
The AA framework, introduced on September 2, 2021 to enhance financial data-sharing with user consent, has seen increased adoption as regulators and financial institutions push for open banking-like services in India.
The framework was created through an inter-regulatory decision by the RBI and other regulators, including the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority (IRDA), and the Pension Fund Regulatory and Development Authority (PFRDA), through the initiative of the Financial Stability and Development Council (FSDC).
As of December 2024, more than 119 million users have linked their accounts on the AA framework, with more than 2.2 billion financial accounts enabled to share data, according to Sahmati.org, the technological infrastructure for the AA ecosystem.
PhonePe maintained its stronghold in India's digital payments space, recording over 798 crore UPI transactions in December 2024—a 7.8% increase from the 740 crore transactions registered in November.
The Walmart-backed platform processed transactions worth Rs 11.76 lakh crore last month, up from Rs 10.88 lakh crore in November. In December, PhonePe contributed to nearly half of the total transaction value and accounted for over 47% of all UPI transactions.
Edited by Kanishk Singh