Online Payment / PhonePe gets a big gift from RBI, will increase its dominance in the digital payment sector

Online Payment: The Reserve Bank of India (RBI) has given a major gift to fintech company PhonePe ahead of Diwali. The RBI has approved PhonePe to operate as an online payment aggregator. With this approval, PhonePe will now be able to easily accept and settle online payments for merchants and small and medium businesses (SMEs). Previously, PhonePe was only allowed to handle online payments, but now it will expand its merchant network to offer digital payments to more businesses.

RBI Approval and Its Significance

Last Friday, PhonePe received formal approval to operate as an online payment aggregator. This move will allow PhonePe to further strengthen its merchant network, especially for small and medium businesses (SMEs). Yuvraj Singh Shekhawat, Chief Executive Officer (CBO), Merchant Business, PhonePe, said, "With this approval, PhonePe will be in a position to provide better services to businesses that previously faced limited options when it comes to digital payments. We have a special focus on the SME segment, which is the backbone of India's economy."

This approval will help PhonePe further enhance its payment gateway. This gateway provides quick onboarding of merchants, easy integration for developers, and a seamless checkout experience to increase payment success rates.

What is an online payment aggregator?

• An online payment aggregator is a service that helps businesses (merchants) accept online payments from their customers. This process works in the following steps:
• Merchant onboarding: Any business, such as an online store or service provider, signs up with a payment aggregator. During this process, the merchant's KYC and business details are verified.
• Payment Gateway Integration: The aggregator integrates its payment gateway into the merchant's website or app. This acts as a digital "cash counter," simplifying the payment process.
• Multiple Payment Options: The aggregator supports multiple payment options, such as credit/debit cards, UPI, net banking, and digital wallets (such as PhonePe, Google Pay). Customers can choose the payment method as per their convenience.
• Payment Processing: When a customer makes a payment, the aggregator processes it. It coordinates with banks, card networks (such as Visa, Mastercard), and other financial institutions. The customer receives a confirmation upon successful payment, and if the payment fails, the reason is also explained.

PhonePe's Journey and Achievements

Founded in 2016, PhonePe has become one of India's largest fintech companies. The company has over 650 million registered users and a vast network of 45 million merchants. PhonePe processes over 360 million transactions daily. Its portfolio is not limited to payments; it has also expanded into areas such as lending, insurance distribution, wealth products, hyperlocal e-commerce (pincode), and the Indus Appstore.

The Road Ahead for PhonePe

This RBI approval will allow PhonePe to further expand its digital payments ecosystem. This is a significant step towards empowering small businesses and promoting the digital economy in India. PhonePe will now focus on bringing more merchants onto its platform, simplifying digital payments, and strengthening the SME segment.

This move will provide new impetus not only to PhonePe but also to India's digital payments sector, helping to make the country's economy more inclusive and digital.