Tag: payment aggregator

Still a long way to become a Super App: PhonePe co-founder

Banking & Finance

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As the race to become a super app heats up in the India, PhonePe co-founder and CTO Rahul Chari said that the company still has a long way ahead in building such as platform.

Given the multiple offerings and partnerships, PhonePe is often counted as a potential super app for Indian consumers. Super app is defined as an app that has at least two high frequency use-cases or functions.

“I think send (sending money) and spend (merchant transactions) is where we believe that we have made our mark, and we still have a long way to go when it comes to financial services, so we are still a way off,” Chari told BusinessLine.

Build trust

Adding to that, Karthik Raghupathy, Head of Strategy and Investor Relations at PhonePe, noted that the company is feeling good about their journey as consumers are trusting them with send and spend related services.

“We need to build trust to enter financial services. Banks have historically had that trust because people have placed their earnings with them. We are gaining that trust on the back of payments. Now as we move into the financial services space, we are seeing good proof points that we can get there but like Rahul (Chari) said, there’s still a long journey ahead of us,” he said.

Consolidated service

PhonePe has expanded into a majority of verticals encompassing all things money. Users can today send and receive money, recharge mobile, DTH, data cards, pay at stores, make utility payments, buy gold, insurance and make investments. PhonePe also launched its Switch platform in 2018, enabling users to place orders on 600 apps directly from within the PhonePe mobile app. PhonePe claims to be accessible at 20 million merchant outlets across 12,000 towns and 4,000 taluks nationally.

The most frequent use-cases on the app are digital money transfers, bill payments or recharge, and offline transactions at stores. The executives claim that once a new user has done two or more of these three use-cases, they tend to stay with PhonePe and repeat transactions happen in almost 100 per cent cases.

Also see: Proposed e-commerce rules could dampen super app plans of many Indian players

Chari added that PhonePe is focused on building a service where everything about money is easily available to the users on a single platform that they trust and engage with. And the experiences around daily and high frequency use cases are about transactions that are completed in the fastest possible manner.

PhonePe recently got its insurance broking license and an in-principle approval to operate as an account aggregator. Going forward, PhonePe will be focusing more on the financial services space and collaborating more with the BFSI sector across insurance, investments, and lending.

While the company did not comment on the profitability and IPO timelines. Chari noted that the company is quite efficient in growing its user base and has stopped doing cash backs to inspire repeat customer behaviours.

Interactive website

Further, PhonePe has launched an interactive website showing data, insights, and trends on digital payments done through its app — called PhonePe Pulse. PhonePe claims to have a 45 per cent market share in digital payments, and a 300 million user base.

The company sees this as a way to give back to the ecosystem and hopes that government, policy makers, regulatory bodies, media, industry analysts, merchant partners, start-ups, academic institutions and students will benefit with this data.

“It’s not all necessarily just noble and altruistic. If any of these collaborations happen, I’m sure there will be people who would want to strike a partnership with PhonePe. There will be new companies that emerge, they can actually then collaborate much more deeply with us, so we will actually benefit both as a business and a product, along with the larger goal of saying we are enabling multiple businesses,” said Chari.

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From Amazon to Zomato, a big crowd at RBI doors for payment aggregator licence, BFSI News, ET BFSI

Personal Finance

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Mumbai: A slew of companies harbouring fintech ambitions have made a beeline to the Reserve Bank of India to become licensed Payment Aggregators (PAs) under the central bank’s upcoming regulatory regime for non-bank payment providers.

Firms that have applied for authorisation or in advanced stages of submitting their proposals to the RBI include the Tata group, Amazon, Reliance Industries, Dutch payments startup Adyen, Paytm, BharatPe, PhonePe, CC Avenue, Razorpay, Cred, Zomato, PayU, Worldline, Pine Labs and CAMSPAY, sources involved in the diligence process told ET.

At least 30 firms are learnt to have submitted their proposals, sources said, indicating that the number of applicants could increase before the September 30 deadline for existing and new non-bank firms to apply.

The firms that will be authorised to operate as PAs in India will be under the direct purview of RBI in rendering payment services to merchants, in a step that many industry insiders said would lead towards a more standardised and regulated payments ecosystem.

“For long, the operations of PAs in India have been seen as a blind spot for regulations,” said a payments industry insider. “RBI’s PA/PG rules in this regard were introduced to ensure a standard for those firms offering payment service to merchants.”

“There is a feeling that any internet firm with a mass consumer base will be applying for a PA licence as the eligibility barrier is low and missing out on approval can limit any future expansion in offering fintech services,” the source said.

Under the new rules, any firm acquiring merchants would compulsorily need RBI approval to operate as a licensed PA, the source added.

The central bank’s new Payment Aggregator/Payment Gateway guidelines – introduced formally in March 2020 – mandate that only firms approved by RBI can acquire and offer payment services to merchants. Regulated banks do not need any separate approvals.

As per RBI rules, the eligibility criteria for a firm applying for PA authorisation is a minimum net worth of Rs 15 crore in the first year of application and going up to Rs 25 crore by the second year.

The firm also must fulfil ‘fit and proper’ criteria as well as be compliant with global payment security standards under PCI DSS, an information security protocol maintained by payment firms across the world.

“PhonePe has been operating as a Payment Aggregator, offering payment services to merchants on our network. In line with the RBI guidelines, we would be applying for the PA licence to continue offering payment services to our merchant partners,” a PhonePe spokesperson said.

According to Ramesh Narasimhan, Head – Digital Commerce, Worldline India, “Ingenico ePayments India – a Worldline brand, is in the process of directly applying for the Payment Aggregator license well before the deadline as we remain committed to deepening the reach of online payment solutions in India.”
Spokespersons for Adyen, Razorpay and Cred did not offer comment. Other firms cited earlier in the story did not respond to ET’s email. RBI also did not comment.

Newly listed Zomato said in exchange disclosure that it had already incorporated a wholly owned subsidiary to handle digital payments and payment gateway services.

Sources told ET that many leading e-commerce marketplaces, global payment firms, existing PGs and domestic consumer internet firms are also in line to apply for authorisations.

ET could not independently confirm these names.

“There is almost a sense that RBI is inundated with the rush of applications,” a second source aware of the matter said. “The indication has been that RBI will take a ‘First In, First Out’ approach in scrutinising different proposals. This means that the overall scrutiny process is likely to take a few months.”

“The regulator will also allow firms to continue their operations until they communicate the fate of the respective proposals. For a PA operating in India whose application has been turned down, the expectation is that RBI will offer a window to wind down its operations,” the source, who is the chief executive of one of the firms applying for authorisation, told ET.

RBI defines PAs as entities that facilitate e-commerce sites and merchants to accept various payment instruments from the customers for completion of their payment obligations, without the need for merchants to create a separate payment integration system of their own.

PGs are defined as entities that provide technology infrastructure to route and facilitate processing of an online payment transaction without any involvement in handling of funds.

The motive of the new PA/PG guidelines could also be to have a better supervisory control over payment operations of internet and e-commerce firms in India.

The applicability for PA/PG authorisation could be made ‘on-tap’ after the initial set of approvals, a third source said.



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