PhonePe's Merchant & Lending Engine Powers Pre-IPO Push Despite Profitability Squeeze
PhonePe draws 86% of its ₹7,000 Cr FY25 revenue from payments while merchant services, lending (₹14,270 Cr facilitated) and insurance emerge as fastest-growing verticals. With 47% UPI share, 700 Mn+ consumers and 92 Lakh payment devices, it monetises kiranas and retailers ahead of IPO — but heavy fintech competition keeps profits elusive.
What happened
Analysis of PhonePe's monetisation across UPI, merchant services, lending, insurance and wealthtech ahead of its IPO. Merchant payments and financial services
Key facts
- $2.89 Bn raised
- ₹7,000 Cr FY25 revenue
- ₹3,918.5 Cr H1 FY26 revenue
- 86% from payments
- 92 Lakh payment devices
- 700 Mn+ consumers
- ₹14,270 Cr loans facilitated
- 1.85 Cr insurance policies
- 10 Bn UPI transactions/month
- 47% UPI share
Why this matters
PhonePe's pre-IPO diversification into lending and insurance signals appetite for partnerships or acquisitions in merchant financial services, making it both a distribution ally and a competitive threat in the UPI-adjacent stack.
What to watch
- NPCI decision on UPI 30% market-share cap deadline
- DRHP filing and targeted valuation vs FY25 ₹7,000 Cr revenue
- H2 FY26 loss/EBITDA trajectory and financial-services revenue share
- MDR reintroduction debate on UPI transactions
- Merchant lending default/NPA trends as book scales
- Push lending and insurance cross-sell into merchant base to raise blended take rate
- File DRHP emphasizing financial-services growth narrative over payments volume
- Expand soundbox/POS device footprint to lock in kirana merchant data for underwriting
- Seek NBFC/lending partnerships or own-book expansion to capture more of the credit spread