UPI payments giant PhonePe exits account aggregator business; Here's why

India's UPI payments giant, PhonePe, has decided to exit the account aggregator business and surrender its NBFC-AA license to the Reserve Bank of India (RBI). 

The Walmart-backed fintech firm said it will focus on collaborations with existing aggregators rather than running its own service, citing the need to reallocate resources and address competing business priorities.

Exiting the AA space

PhonePe introduced its account aggregator service in June 2023 through its subsidiary, PhonePe Technology Services, in an effort to boost financial inclusion by allowing customers to share their financial data—such as bank statements, insurance policies, and tax filings—with regulated financial information users.

The idea was to help users access loans, insurance, and investment advice more easily. The Bengaluru-based company said it enrolled nearly 50 million people for its account aggregator platform within two years, but it was not able to onboard as many financial information providers (FIPs) as it had planned.

Changing strategy and partnerships

PhonePe said it still believes in the importance of growing the account aggregator ecosystem to improve financial inclusion, but it has decided to work with existing AA providers instead. 

With multiple account aggregators now offering robust services, PhonePe sees a better path in partnering with them to serve its customers rather than managing its own platform. The company has already started winding down its AA operations and has initiated the process of notifying users about the change.

Background on account aggregators

Account aggregators are regulated by the Reserve Bank of India under the NBFC-AA framework introduced in September 2021. These entities serve as consent managers that allow individuals to share financial information with banks, insurers, or other regulated institutions, as long as the user approves.

The model has helped speed up loan processing and improve open banking efforts in India. According to the DigiSahamati Foundation, more than 100 million consents have been facilitated through the AA network, with an estimated 80 to 90 million Indians using the system.

The foundation says the number of financial information providers and financial information users has also grown rapidly in recent years, reflecting increasing adoption.