PhonePe Reduces Losses To Rs 1,996 Cr, Revenue Soars By 85% In FY24

As per media reports, PhonePe, a digital payments player, has cut its losses to Rs 1,996 crore for the financial year 2024 (FY24), a notable improvement from the rs 2,792 crore loss recorded in FY23. The Bengaluru-based company reported an impressive 85.5 per cent increase in revenue from operations, reaching Rs 5,725 crore, compared to Rs 3,085 crore the previous year.

Approximately 10 per cent of this revenue is derived from government subsidies aimed at promoting digital payments. The company highlighted in its FY24 annual report that these subsidies play a crucial role in supporting its revenue, as per media reports.

PhonePe has significantly decreased its cashbacks and incentives over the past five years, with expenses related to customer rewards plummeting from over Rs 950 crore in FY19 to just over Rs 15 crore in FY24.

The company's total expenses rose by 31.3 per cent year-on-year, increasing from Rs 5,907 crore in FY23 to Rs 7,756 crore in FY24. Notably, payment processing charges accounted for about 15 per cent of total expenses, amounting to Rs 1,166 crore, according to media reports.

Dominating India's real-time payments landscape, PhonePe processed 7.22 billion transactions in September 2024, capturing around 48 per cent of the market share. Most transactions on the Unified Payments Interface (UPI) remain free for both merchants and customers, with fintechs and banks absorbing the associated costs.

Despite facing significant challenges, including the ‘Zero MDR’ law and the COVID-19 pandemic, PhonePe remains focused on process automation and improving unit economics to pave its way toward profitability. The company has reduced its customer service workforce by 60 per cent year-on-year, from 1,100 in FY23 to just over 400 in FY24.

However, concerns about a proposed market share cap on UPI transactions by the National Payments Corporation of India (NPCI) are currently hindering PhonePe's plans to go public. The NPCI directive, which limits a Third Party Application Provider (TPAP) to 30% of UPI transaction volumes, has seen multiple deadline extensions, with the latest set for December 2024.