PhonePe Secures Final RBI Approval as Online Payment Aggregator, Eyes SME Expansion
In a significant development for India’s fintech ecosystem, Walmart-owned fintech giant PhonePe has received the final authorisation from the Reserve Bank of India (RBI) to operate as an online payment aggregator (PA). This approval marks a major milestone for the company, coming over two years after it received in-principle clearance from the central bank in August 2023.
With this authorisation, PhonePe is now fully empowered to onboard online merchants, facilitate digital transactions, and offer a wide range of integrated payment solutions, especially targeting the small and medium-sized enterprises (SMEs) that have historically been underserved in India’s digital economy.
Read Also :- RBI’s New Rules Disrupt Credit Card Rent Payments on PhonePe, Paytm, and CRED
What the PA Licence Means for PhonePe
A Payment Aggregator (PA) licence is a regulatory green light from the RBI that allows fintech companies to:
- Onboard merchants directly
- Accept payments across multiple instruments (cards, UPI, wallets, etc.)
- Pool customer payments into an escrow account
- Settle transactions without the need for merchants to build separate integrations with banks or PSPs
This capability enables smoother, more reliable digital payments — particularly beneficial for smaller businesses that lack robust technical infrastructure.
Focus on Financial Inclusion and SME Empowerment
Following the RBI’s final approval, PhonePe is expected to scale its merchant services, focusing on empowering SMEs and micro-businesses across India. According to Yuvraj Singh, CBO – Merchant Business at PhonePe, the company is uniquely positioned to drive financial inclusion by delivering accessible, seamless, and secure digital payment solutions.
“PhonePe is well-positioned to accelerate financial inclusion by providing accessible payment solutions to businesses that were previously underserved, particularly in the SME segment,” said Singh.
“The company’s focus on serving both established enterprises and emerging businesses aligns with its goal of enabling broader digital financial inclusion.”
With millions of merchants already using PhonePe’s platform, this PA licence will help formalize and expand its offerings, enabling more merchants — especially in Tier 2 and Tier 3 cities — to accept digital payments without complex setup or technical integration.
Strategic Advantage in the Fintech Race
PhonePe’s new status as a fully authorised payment aggregator gives it a distinct edge in India’s fiercely competitive fintech market, where rivals like Paytm, Razorpay, and Google Pay are also vying for dominance in the merchant ecosystem.
With its strong brand presence, deep integration with UPI, and now, regulatory backing, PhonePe is poised to capture a larger share of India’s rapidly growing digital payments market, which is expected to cross USD 300 billion in value by 2026.
What’s Next for PhonePe?
The PA licence opens the door for PhonePe to innovate further in merchant solutions — including customised dashboards, payment insights, and instant settlements. Moreover, this move aligns with the Indian government’s ongoing push toward a cashless economy and digital Bharat.
As digital adoption continues to rise, PhonePe’s ability to offer streamlined payment solutions — especially to SMEs — will be instrumental in driving the next wave of growth in India’s fintech revolution.
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