PhonePe Account Aggregator Pvt Ltd, a wholly-owned subsidiary of the PhonePe Group, received in-principle approval from the Reserve Bank of India (RBI) to operate as an Account Aggregator (AA) to share financial information.
Features of the license:
i.The license will enable PhonePe to launch its AA platform, which will facilitate the free exchange of financial information between the financial information users (FIUs) and financial information providers (FIPs) on the AA Ecosystem in a safe and secure manner.
ii.Consent based data sharing: The exchange of data under the platform could be executed only with due consent from customers.
iii.The AA platform will eliminate the existing process of physical document submission and help Indian consumers to avail financial services in an easier way.
iv.The AA could not support transactions in financial assets by customers. AA was allowed only to transfer the client’s data but not store it.
i.The RBI has announced the AA framework via a Master Directive in June 2016 to enable the customers to get benefits like viewing statements of their accounts, track deposits, plan investments and avail credit cards on a single window.
ii.The RBI gives licenses and governs the rules for AAs.
Note – In October 2020, IndusInd Bank became the 1st bank in India to go live as a FIP under the AA Framework of the RBI.
Other entities that have already received an AA licence from the RBI are Cookiejar Technologies, FinSec AA Technologies, NESL Asset Data, and CAMSfinserv.
PhonePe Received Insurance Broking Licence from IRDAI
PhonePe has received an insurance ‘broking licence’ from the Insurance Regulatory and Development Authority of India (IRDAI).
- In 2020, PhonePe entered into the insurance sector by receiving the limited insurance ‘corporate agent’ licence, which restricted the company to partner only with 3 insurance companies per category.
- Now the ‘direct broking’ licence will enable the PhonePe to distribute insurance products from all insurance companies in India to its ~300 million registered users.
PhonePe is now entering into the financial service segment as the payments business is making less profit due to Zero MDR charge.
- MDR Charge: In 2019, the Ministry of Finance has waived the Merchant Discount Rate (MDR) charges on transactions through RuPay and Unified Payments Interface (UPI) platforms (i.e. the transaction fees/MDR was set to be zero).
- MDR is the cost paid by a merchant to a bank for accepting payment from their customers via digital means.
Headquarters – Bangalore, Karnataka
CEO – Sameer Nigam