With an IPO around the corner, Phonepe’s biggest strength is becoming its Achilles heel

 Phonepe is all set to debut in the public market in the second half of FY26. That perhaps seems like the natural next step for the fintech giant. After all, it commands nearly half of the market share in UPI transactions today. 

Between 2020 and now, it has gone from catering to one in five Indians to one in three. And yet, the path to its IPO isn’t quite as simple as you would think. In fact, it’s a tough road ahead for the company. 

And that’s precisely because of the one thing Phonepe is best known for – payments. You see, as much as 96% of Phonepe’s topline in the last financial year was thanks to Phonepe’s payment business. 

You’re probably wondering what’s wrong with that. After all, payments were what put Phonepe on the map. Fair point. But the thing is, being over reliant on payments could hurt Phonepe. 

Think about it. If anything about the payments business were to go south, it would be almost impossible for Phonepe to pivot in time. Which is why the key is to diversify. And it’s not like Phonepe hasn’t tried. Five years ago it launched its own financial services arm – Phonepe insurance. 

But unfortunately, today, there still isn’t much to brag about.

Tune in.

Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.