how PhonePe earns money

The question residing in many minds is how PhonePe earns money. As everyone already knows, PhonePe is a digital payment application built on Unified Payments Interface (UPI). Also, it was founded in December 2015 with Sameer Nigam and Rahul Chari as its founders.

PhonePe has been a time saver app and made people’s lives smooth. Thus, paying bills, doing recharges, and more have become 10 times easier. But, the question is how PhonePe earns money from all this? Are the customers charged or the other entity? Are users charged without knowing? So, this article will answer all questions about how PhonePe earns money and whether the users are at loss.

Table of Contents

What is PhonePe and how did it become popular?

PhonePe is a digital payment application that supports over 11 languages. Also, it is one of the first payment applications built on the Unified Payments Interface (UPI) and also the first one to cross the billion transaction mark. Some of the facilities provided by PhonePe includes receiving and sending money, checking account balance, buying gold, making POS payments, and more. Also, a range of recharges including sim card recharges, electricity bill payments, DTH payments, gas payments, and more can be done easily. PhonePe is one of the most common and trusted UPI platforms and is approved by a majority of merchants. Hence, users can even book rides, purchase goods, and order food using it.


Therefore, there are approximately 280 million PhonePe users, with 17 million merchandisers spread in around 500 Indian cities. The headquarters of PhonePe is in Bangalore, India. The application has also received a legal sanction from the Reserve Bank of India (RBI). So, PhonePe can easily share its financial data with the Financial Information Users (FIUs) and Financial Information Providers (FIPs).

PhonePe revenue in 2021, How PhonePe earns money?:

Digital Payment applications have witnessed huge growth in India. Thus, this growth is a result of the digitalization of India especially after the onset of the covid-19 pandemic. UPI applications like PhonePe saw a growth of around 76 percent in the past year. Hence, it incorporates a host of first-time digital payment users. PhonePe revenue in 2021 has increased by leaps and bounds. Also, it is expected that payment applications will be at around $700 billion by the end of 2022.

As per the report received on 7th December 2021, PhonePe has a market share of 46.3 percent followed by Google Pay at 36.4 percent shares. PhonePe revenue in 2021 is reported to be 690 crores INR. Hence, there has been a massive jump of 85.5 percent comparing PhonePe revenue in 2021 from PhonePe revenue 2020. In 2020, the reported revenue was INR 372 crores.

how PhonePe earns money
Source: facebook

How PhonePe earns money? PhonePe revenue model explained:

PhonePe commission is a chief source of money mostly earned from the promotion of various products on its application. Several brands are promoted with the help of various gift vouchers, cash-backs, and offers. Recharge centers always earn commission from telecom companies when a person comes to them for recharge. Similarly, PhonePe earns money in the form of commission when users recharge their phones using it. Thus, a major amount of how the app earns money is based on bill payments and recharges. Also, it collects revenue from a partner using the Switch platform. Hence, here are some methods for how PhonePe earns money:

  • Bill Payment – PhonePe application has a tie-up with several merchant companies. Hence, whenever any user pays a bill using the PhonePe application, the app gets a commission from the respective company.
  • Apps – Several mobile applications like Dominos, Myntra, OYO rooms, Grofers, etc work with PhonePe. Hence, PhonePe often has a separate column for such apps. Any payment made on these apps via PhonePe fetches money and adds up as PhonePe commission.
  • Digital Gold – The application helps you but Gold also. Thus, a little extra charge is levied on the actual price which is how PhonePe earns money.

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  • Gift Vouchers – The users often get several gift vouchers on PhonePe from apps like Airtel Money, Freecharge, Oxygen wallet, and many more. Hence, every sold gift voucher adds up as PhonePe commission.
  • Promotion – With a humongous database, the app has got a key to profit-making. Hence, with the help of several insights extracted from the database, the payment pattern of customers is determined. So, the deduction of the customer’s purchasing pattern along with the store’s detail is easy. Promoting apps becomes smooth this way.

Dated on 23rd October 2021, PhonePe decided to charge upto INR 2 worth of processing fee on all mobile recharges. Hence, a cost of Re 1 is levied on recharges between Rs. 50 to 100, and Rs. 2 is levied on recharges above 100. Thus, this is a part of the new Fintech giant plan devised by the application.

PhonePe Competitors:

Many other UPI-based digital payment apps exist that offer cut-throat competition to PhonePe. Such PhonePe competitors include Juspay, Paytm, BharatPe, mobilPay, and more. Recently, the app started a new concept of charging processing fees. But, this bothered many users and even the PhonPe competitor Paytm tweeted against it. Thus, the role of rivals is pivotal in the growth of any company.

PhonePe competitor JusPay is an app for mobile-based payments found in 2012. Also, Paytm is a huge rival founded in 2010 as a pioneer of the Indian e-commerce payment system.

What is the full form of UPI? How UPI apps earn money?

As for the full form of UPI, it is the Unified Payments Interface. Hence, this UPI system powers multiple banks accounts in a single mobile app. Several bank account features, seamless fund routing, and all merchant payments are brought under one hood by UPI. Earlier, the UPI apps earned money via Payment Service Provider (PSP). But, now PSP is abolished and no UPI apps earn money from it. Therefore, commissions are the only way by which UPI apps earn money now. Many UPI apps like PhonePe, Google Pay, Paytm, and more are thriving on the basis of their revenue model based on commissions.




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