How PhonePe Makes Money: UPI, Loans, Merchants & More

The biggest red flag or concern when it comes to PhonePe is its profitability, particularly as the company heads to an all-important IPO in the near future

In the five years since then, the market has had the experience of not only studying Paytm’s own topsy-turvy run, but also MobiKwik and others in adjacent spaces such as Pine Labs and Groww.

Given this, how exactly is PhonePe making money and what are the buttons it needs to push to get to profits, just like Paytm has

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For the everyday Indian, PhonePe is just a free UPI app. One rarely pays anything extra to PhonePe for splitting a dinner bill with friends, phone recharges, or even paying the neighbourhood kirana store. But this is an entirely simplistic view, and one that misses the many nuances of running a modern-day fintech super app.

Having raised about $2.89 Bn since 2015, PhonePe has leveraged the capital to grow its user base and build a business model which seems innocuous enough at first glance, but where the sum is greater than the parts.

Despite that, the biggest red flag for PhonePe is its profitability, particularly as the company prepares for an IPO in the near future. But to examine how long it might take PhonePe to break this rut, one can take a look at how its close rival Paytm did it.

Despite that, the biggest red flag for PhonePe is its profitability, particularly as the company prepares for an IPO in the near future. But to examine how long it might take PhonePe to break this rut, one can take a look at how its close rival Paytm did it.

In the run-up to Paytm’s public listing in 2021, Paytm CEO Vijay Shekhar Sharma also pointed out that the fintech business model — one built around UPI as a top-of-the-funnel product or entry point — was not well understood by public market investors. In the five years since then, the market has had the experience of not only studying Paytm’s own topsy-turvy run but also MobiKwik and others in adjacent spaces such as Pine Labs and Groww.

All this means that the market........

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