PhonePe Exits Account Aggregator Business, Surrenders NBFC-AA License To RBI

PhonePe Exits Account Aggregator Business, Surrenders NBFC-AA License To RBI

India’s largest fintech firm, PhonePe, announced on Friday that it is exiting the Account Aggregator (AA) business after failing to onboard a sufficient number of financial partners to meet its expectations. As part of this decision, the company has initiated the wind-down of its AA operations and has opted to surrender its Non-Banking Financial Company-Account Aggregator (NBFC-AA) license to the Reserve Bank of India (RBI).

PhonePe’s AA platform allowed users to share their financial information with banking and financial institutions—with their consent—for services such as loans and credit cards. Despite successfully registering nearly 5 crore users in less than two years, the company cited competing priorities as a key reason for its exit.

“We feel proud that we have managed to register nearly 5 crore Indians onto our AA platform in less than two years. However, due to competing priorities, we have not been able to onboard as many financial information providers (FIPs) to our platform as we would have liked. Therefore, PhonePe Group has decided to exit the Account Aggregator business and instead partner with other AAs in the market,” the company stated.

The Walmart-backed fintech had received its AA license in June 2023 with the aim of strengthening the AA ecosystem and advancing financial inclusion. “By 2022, the AA ecosystem was still in its early stages with low adoption numbers. So, in June 2023, we obtained our own AA license to build an Account Aggregator platform and accelerate the ecosystem’s growth. This was a departure from our usual strategy of focusing solely on end-consumer (B2C) products,” PhonePe explained.

The company assured that it would soon reach out to its AA users to inform them about the decision and assist them in accordance with regulatory guidelines.