PhonePe has received a license from the Central Bank of the UAE, marking its first international market for local operations beyond cross-border UPI services. As a private, Walmart-majority-owned entity, this expansion represents a strategic move into foreign digital payments while the company simultaneously scales lending and financial inclusion initiatives in India.
PhonePe has officially received a license from the Central Bank of the United Arab Emirates, allowing the fintech major to establish local operations in the country. This marks a major shift in the company’s international strategy, moving it beyond its current model of enabling cross-border UPI payments for Indian travelers. The UAE will now serve as the company's first overseas market with a direct operating presence.
While PhonePe has expanded its UPI footprint to several countries, including Singapore, Mauritius, and France, those services generally rely on existing local payment infrastructure. The new license empowers the company to build and manage its own payment operations within the UAE. This move comes as the company seeks to diversify its business model and tap into new revenue streams outside its home market.
Financial Context and Strategic Focus
PhonePe remains a private company, majority-owned by retail giant Walmart. For the financial year 2026, the company reported consolidated revenue of ₹7,920 crore, reflecting an 11.5% year-on-year increase. However, the business also reported a consolidated net loss of ₹2,792 crore for the same period. This loss includes non-cash and one-time accounting adjustments; the company's normalized operating loss stood at ₹1,377 crore.
To bridge the path toward sustainable profitability, PhonePe is aggressively scaling its non-payment verticals. The company is currently focusing on three key areas: expanding its reach to the 250 million Indians using feature phones, deepening its penetration in low-ticket savings and insurance products, and growing its merchant lending portfolio.
Expansion and Risk Factors
The company is rolling out USSD-based payment services to cater to feature-phone users, allowing them to make peer-to-peer transfers and scan QR codes. Simultaneously, it is building a lending business, having already issued over 1.5 million merchant loans. Its credit portfolio now includes secured and unsecured loans, vehicle finance, and gold-backed loans.
Despite these growth efforts, the company faces significant challenges. The Indian fintech sector is highly competitive, and PhonePe operates under strict regulatory scrutiny. Future growth may be impacted by potential UPI market share caps and evolving Reserve Bank of India (RBI) guidelines, which have previously forced the company to alter its revenue models. Furthermore, while the company has previously explored an initial public offering (IPO), geopolitical tensions and market volatility have contributed to those plans being deferred.
For observers and potential stakeholders, the key monitorables will be how effectively PhonePe executes its international expansion in the UAE and whether its push into credit and lending can improve its earnings quality. Success will depend on navigating regulatory hurdles in India while demonstrating that it can successfully export its payment technology to new, competitive foreign markets.