PhonePe now has a licence to run payments in a country that is not India
PhonePe said on September 9, at the Global Fintech Festival in Mumbai, that it holds two licences from the Central Bank of the UAE. One covers consumer payment instruments such as wallets and gift cards. The other covers merchant acceptance.
Until now its overseas presence meant an Indian traveller paying by UPI in Dubai. These licences make it a locally regulated payments company in the UAE, able to sign Emirati merchants and issue wallets to residents.
The UAE is home to roughly 3.5 million Indian residents and is one of the two largest sources of remittances into India. PhonePe is not starting from zero recognition there.
The part worth watching is remittances. Money sent home from the UAE currently passes through exchange houses and banks that earn a spread. A company holding a wallet licence on one end and hundreds of millions of Indian accounts on the other can compress that spread in a way a remittance specialist cannot.
It also changes what PhonePe can be valued on. A domestic UPI transaction earns almost nothing. A foreign licence, in a market where merchant discount rates are real, gives it revenue per payment for the first time. An IPO file reads differently with a second country in it.