Inside PhonePe’s Revenue Engine: A Pause on Rent & RMG — And Why It’s Fixable

Some people believe PhonePe could be affected by the RBI’s tighter stance on certain payment flows—especially recurring and higher-risk categories like rent payments and Real Money Gaming (RMG).

At first glance, the concern sounds reasonable.
Payments are, after all, the backbone of PhonePe’s business.

But look a little deeper and this doesn’t resemble a structural crack.
It looks more like a temporary regulatory pause—one that can be corrected with clearer rules.

To see why, we need to start with how PhonePe actually earns its money, and where regulators chose to step in.

Let’s break it down.

A) PhonePe’s ₹7,115 Cr Revenue Stack (FY25)

PhonePe reported ₹7,115 crore in total operating revenue in FY25. Here’s how it breaks up:

Nearly 90% of PhonePe’s revenue comes from payment services.

So if regulation tightens here, the impact naturally looks amplified.

But payment services weren’t a single, uniform stream.

B) The Hidden Concentration Inside Payments

Within payment services, two categories carried outsized weight:

• Rent & related payments

• Real Money Gaming (RMG)

Payment Revenue – Sub-Split (FY25)

Put simply:

• Rent alone contributed ~₹1,260 crore

• RMG added ~₹245 crore

• Combined exposure: ~₹1,500 crore+

That’s roughly 24% of payment services revenue concentrated in just two segments.

Both later attracted regulatory scrutiny.

C) Why RBI Stepped In ??

This wasn’t sudden or arbitrary tightening.
From a regulatory lens, both categories had structural concerns.

1️⃣ Rent & Related Payments: A Compliance Challenge

Rent payments were often routed through:

• Credit cards

• P2P-style flows masking merchant transactions

• Repeated usage enabling credit cycling

From the RBI’s perspective, this led to:

• Weak end-use traceability

• Blurred merchant classification

• Potential misuse of UPI rails for credit

As a result, PhonePe discontinued rent and related payment categories in September 2025.

The revenue decline reflects this clearly:

Rent Revenue as % of Platform Revenue

This stream is now structurally removed, not temporarily suspended.

2️⃣ Real Money Gaming (RMG): When Regulation Changed the Math

RMG once looked attractive:

• High take rates

• Low infrastructure costs

• Strong margins

But regulation altered the economics.

RMG Revenue Decline

Key pressure points:

• 28% GST on deposits compressed margins

• Higher compliance requirements

• Rising concerns around consumer harm

• Payment apps acting as indirect gambling rails

RMG wasn’t banned.
It simply became less attractive for a payments-first platform.

D) The Near-Term Impact: Optics Do Take a Hit

From the FY25 snapshot:

The impact is clear:

• Slower reported payment revenue growth

• Softer year-on-year comparisons

• Short-term headline pressure

That’s why some observers believe PhonePe could be affected in the near term.

E) What the Market Often Overlooks

Strip out rent and RMG, and what remains is PhonePe’s strongest, cleanest revenue engine.

Core Payments Revenue (Excluding Rent & RMG)

Two clear signals emerge:

• Merchant payments are scaling rapidly

• This revenue is fully regulator-aligned

This is the segment the RBI is most comfortable with:

• Transparent audit trails

• Lower misuse risk

• Long-term monetisation via ads, subscriptions, and merchant credit

F) Did PhonePe Actually “Lose” Revenue?

Not exactly.

PhonePe chose to step away from higher-risk revenue.

Yes, growth may look slower in the short term.
But the trade-off is meaningful:

• Lower regulatory overhang

• Better quality of earnings

• Stronger long-term credibility

Fast-growing revenue isn’t always durable revenue.

G) The Bigger Picture: A Pause, Not a Permanent Roadblock

RBI action has slowed certain revenue lines.
Headline growth may look softer for a while.

But this isn’t the end of the story.

The government has little incentive to permanently dismantle the Real Money Gaming industry, estimated to be worth over $3 billion and supporting a large digital ecosystem.

What’s more likely is a relaunch under clearer, tighter rules:

• Controlled deposit mechanisms

• Stronger KYC and spending limits

• Clear separation of skill vs chance

• Better auditability for payment platforms

In short, RMG isn’t being eliminated—it’s being redesigned.

When clarity returns, compliance-ready platforms like PhonePe are well placed to re-enter.

UnlistedZone Takeaway

PhonePe isn’t shrinking.
It’s navigating a regulatory hurdle—and positioning itself to accelerate once the road clears