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Fintech unicorn PhonePe has officially rolled out its Payment Gateway (PG), as it looks to tap into larger offline and online merchants, including small and medium businesses (SMBs), besides shunning out its dependency on external gateways for its in-app payments. 

The latest offering puts the Walmart-backed digital payments app up against the likes of Paytm and Pine Labs, which already have a large presence in the offline category, and Razorpay and Cashfree in the online space. 

Infact, its fellow payment app, Paytm, had pushed out its own gateway back in 2012.

Meanwhile, other players in the segment are eying the omnichannel strategy and looking to offer gateway services to both online and offline merchants. Offline leader or point of sales (PoS) payment provider Pine Labs launched its own online payment gateway, Plural; while Mswipe will be launching something similar soon. On the other hand, online gateway provider Razorpay acquired Ezetap last year to venture into the offline category.  

“PhonePe is already a market leader in UPI with over 50% market share by value. The company’s ability

to handle large-scale transactions and the strong consumer trust in the platform have translated into

PhonePe launching its PG business to provide the best-in-class payment experience to consumers and merchants alike,” the company told YourStory.

The company, however, did not share specific numbers on the traction or targets.

What’s being offered?

The payment gateway service is the latest addition to PhonePe’s slew of other services that it looks to offer to its 450 million-strong registered user base, including offline merchants. This includes wealth management, lending, stockbroking, ONDC-based shopping app (Pincode), and account aggregation.

PhonePe has received in-principal approval for payment aggregator services, and is awaiting approval from the RBI. Last week, it announced the launch of its Account Aggregator (AA) services through its wholly-owned subsidiary, PhonePe Technology Services Pvt Ltd (PTSPL). 

The PG services are being offered at zero fees as of now. “While most PGs charge a standard transaction fee of 2%, PhonePe has a special offer for new merchants to onboard for free, with no hidden charges, setup fees, or annual maintenance fees,” the company said in a statement.

PhonePe, which hit an annualised total payment value run rate of $1 trillion (Rs 84 lakh crore) in March this year, mainly for leading in UPI transactions, has been relying on external payment gateways to process payments on its app. The users have the option to pay via UPI, credit, debit card, or net banking. 

The company claims to have digitised over 35 million offline merchants spread across Tier II, III, IV cities and beyond, covering 99% pin codes in the country.