PhonePe Ltd, gearing up for its IPO, has unveiled details in its updated draft red herring prospectus, showcasing the extensive reach and lucrative monetization of its merchant network. Contrary to being a free service, PhonePe’s merchant platform has evolved into a multi-billion rupee revenue generator, serving 47 million businesses and numerous physical payment devices. The company’s disclosures to the Securities and Exchange Board of India indicate that PhonePe has nearly saturated the Indian market.
By September 30, 2025, PhonePe had onboarded 47.19 million registered merchants, covering 98.61% of all Indian pin codes. This figure translates to 77-80% representation of India’s total trade and services merchant population as of March 31, 2025. In March 2025, the platform boasted 11.31 million monthly active merchants, constituting around 54% of all active UPI merchants in India.
The engagement of daily active merchants surged to 60.77% of monthly actives by September 2025, a significant increase from 44.18% in March 2023. PhonePe’s physical presence plays a crucial role in generating consistent subscription revenue. The 9.19 million deployed devices not only facilitate payments but also serve as communication tools, delivering business updates to merchants. This hardware network is supported by a substantial field force of 25,657 team members and over 31,000 agents focused on rural expansion.
A standout growth area highlighted in the DRHP is Merchant Lending. Leveraging transaction data from its vast merchant base, PhonePe offers credit insights to partner lenders for collateral-free loans. Loan disbursals surged from Rs 0.11 billion in FY2023 to Rs 45.07 billion in FY2025. In the first half of FY2026 alone, lending revenue hit Rs 2,880.87 million, nearly reaching 88% of the previous year’s total earnings.
In FY2025, the Merchant Payments segment alone raked in Rs 19,910.36 million in revenue, contributing almost 28% to PhonePe’s total operational revenue. With a Merchant Total Payment Value (TPV) of Rs 15 trillion annually, PhonePe has effectively transformed its extensive payment infrastructure into a high-value financial services platform.
