PhonePe brings down losses to Rs 1,996 crore in FY24, revenues up 85%

About 10 per cent of company's revenue comes from government subsidies on digital payments

Fintech major PhonePe trimmed its losses to Rs 1,996 crore in financial year 2024 (FY24), a substantial decrease from a loss of Rs 2,792 crore it posted in FY23. The Bengaluru-based company saw its revenue from operations grow 1.7 times on a year-on-year (YoY) basis. 

In FY24, the company earned Rs 5,725 crore in revenue from operations, up 85.5 per cent from Rs 3,085 crore it earned in FY23. 

About 10 per cent of this revenue comes from digital payment subsidies from the government. 

“The Indian Government grants these subsidies to banks and digital payment players to support the Digital Payments sector. These subsidies contribute to approximately 10 per cent of our revenues,” the company said in its FY24 annual report.

The company has sharply reduced its cashbacks and incentives between 2019 and 2024. 

In FY19, it earmarked over Rs 950 crore as rewards for customers to use the platform. It came down to just over Rs 15 crore in FY24. 

PhonePe’s expenses grew 31.3 per cent on a year-on-year (Y-o-Y) basis from Rs 5,907 crore in FY23 to Rs 7,756 crore in FY24. Payment processing charges alone constituted about 15 per cent of its total expenses and they were pegged at Rs 1,166 crore. 

To put things in perspective, these expenses were about 11.3 per cent of the total expenses in FY23. They nearly doubled from FY23’s Rs 667. 

PhonePe is the biggest player in India’s real-time payments system -- the Unified Payments Interface (UPI). 

The company processed 7.22 billion transactions in September alone, recording around 48 per cent market share. 

Most of the transactions on UPI continue to be free for merchants and customers with payment processing costs borne by fintechs and banks. 

“Despite significant external challenges over the past five years, including the “Zero MDR” law and the COVID-19 pandemic, our relentless focus on process automation and unit economics has driven a clear path to profitability,” the company said in its annual report. 

It added that as part of automating processes, it has cut down customer service teams by 60 per cent on a Y-o0Y basis, from 1,100 in FY23 to just over 400 in FY24.

“The overhang of the proposed market share cap on UPI volumes by the National Payments Corporation of India (NPCI) is holding PhonePe from going public,” Sameer Nigam, founder and chief executive officer (CEO) of the company said in August.

In November 2020, NPCI came up with a directive capping the share of transactions a TPAP could process at 30 per cent of the volume of transactions handled on UPI, which is to be calculated on the basis of the volume of transactions processed during the preceding three months (on a rolling basis).

The deadline to adhere to the cap has been extended multiple times and the latest deadline set by NPCI is December 2024.