In the high-stakes world of Indian fintech, PhonePe has long been seen as a company that rarely faltered. With more than 650 million registered users, it remains the largest player in the UPI ecosystem. However, as the company moves closer to its IPO, a closer look at its disclosures shows several costly bets that have not delivered results beyond payments and lending.
PhonePe’s transaction volumes often make headlines. But its draft red herring prospectus reveals a business that has tried to build multiple new segments at the same time, with limited success outside its core services. The pressure is most visible in the details of its IPO filings.
In its disclosures, PhonePe does not list insurance distribution as a separate business. Instead, it combines insurance with lending, even though it has been building the insurance vertical since 2020. This makes it hard to assess how insurance is performing on its own.
By bundling insurance with lending, the company reports stronger combined revenue and growth numbers. Lending has grown quickly, while insurance has not shown similar momentum. If insurance were performing as strongly as earlier projections suggested, it would likely appear as a separate segment in the filings.
Lending itself has clear limits. For most fintech companies, securing a non-banking financial company (NBFC) licence is key. This licence allows firms to lend from their own balance sheets, improving margins and control. PhonePe applied for an NBFC licence in 2021 and again in 2023, but was unsuccessful both times. It is now reported to be making a third attempt.
Without the licence, PhonePe operates as a marketplace. It brings in customers, while partner banks earn a large share of the profits. The repeated rejections have kept PhonePe in a distribution role rather than allowing it to function as a full lender. As the IPO nears, the renewed effort highlights how dependent the company is on regulatory approval to boost profitability.
Regulatory changes have also limited the growth of non-payment services. For several years, rent payments made via credit cards were a major source of revenue. This segment generated over Rs 12.6 billion in FY25, making up around 18% of total revenue. Regulators later restricted these transactions, bringing that income stream to an end.
Real Money Gaming followed a similar pattern. PhonePe tried to monetise user traffic through gaming-related payments and advertising. Changes under the Online Gaming Act reduced the scope of this business. Gaming contributed nearly Rs 2.5 billion in revenue in FY25, but that figure has since dropped to zero.
Several internal ventures have also struggled to gain traction. One of the most visible was Pincode, a hyperlocal commerce app built on the government-backed ONDC network. Launched as a consumer app, Pincode aimed to move users from payments to shopping. By late 2025, PhonePe shut down the consumer-facing app and repositioned Pincode as a service focused on merchants.
Stockbroking has shown similar constraints. Share.Market, PhonePe’s brokerage platform, had opened just over 1.2 million demat accounts by late 2025. This accounts for less than 0.2% of PhonePe’s registered users. The company has not shared additional performance details for this business.
PhonePe also exited the Account Aggregator segment. The Account Aggregator framework allows users to share financial data with consent and was expected to support lending and insurance sales. PhonePe registered nearly five crore users on the platform within two years. However, it onboarded only 20 financial information providers out of roughly 100 in the ecosystem. By early 2025, the company gave up its licence with the Reserve Bank of India.
A similar trend is visible in newer segments. The “New Platforms” category, which includes wealth products and the Indus Appstore, contributes less than 1% of total revenue. Acquisitions such as WealthDesk and OpenQ have been folded into the business, but their individual revenue contributions are not disclosed.
As PhonePe heads toward its IPO, the filings show a company still heavily dependent on payments volume and lending distribution. Outside these areas, most expansion efforts have either failed to scale or have been limited by regulation. Investors are now left with a clear question: can PhonePe build a more diversified business, or will it remain a large payments platform approaching its growth limits.
