India’s biggest digital payments platform is starting its international expansion in a market where it already has a large potential customer base, but where the payments infrastructure is built differently. 

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PhonePe has received in-principle approval from the Central Bank of the UAE for licences covering Retail Payment Services and Card Schemes and Stored Value Facilities, putting the company on a path towards establishing a locally regulated payments business. The approval is not yet a commercial licence, and PhonePe will need final regulatory clearance before it can begin operations in the UAE.  

Indian travellers already use PhonePe to make UPI payments at participating UAE merchants through arrangements involving NPCI International Payments Limited, NEOPAY and Network International. A locally regulated operation would give PhonePe a much broader role. Once it receives final approval, the company says it plans to work with regional banks, licensed payment service providers and local technology companies, while exploring opportunities to support Aani, the UAE's instant payment platform, and Jaywan, its domestic card scheme.  

PhonePe will have to build around the UAE's banking system 

About 4.3 million Indians live in the UAE, giving PhonePe an obvious starting audience that already understands UPI. The company also has an established cross-border payments connection between the two countries. A locally licensed business puts PhonePe in a different relationship with the UAE market, particularly its banks and payment providers. Rather than simply bringing Indian users into the country's existing merchant network, it will have to develop the local relationships needed to provide regulated payment services.  

The Central Bank's Retail Payment Services and Card Schemes framework covers a range of regulated activities, including payment account and payment instrument issuance, merchant acquiring, payment aggregation and domestic and cross-border fund transfers. PhonePe has not specified publicly which individual services it will launch first under its UAE approvals, so it would be premature to describe the planned operation as a full banking service. The licence categories do, however, give the company considerably more room than its current UPI arrangement.  

Aani and Jaywan add another important part to the plan. Aani is the UAE's instant payment platform, while Jaywan is the country's domestic card scheme, developed under Al Etihad Payments, a Central Bank subsidiary. PhonePe says it wants to explore supporting both through its technology platform. Jaywan is designed for debit, prepaid and credit cards and is intended to work across point-of-sale, ATM and e-commerce payments, giving PhonePe another potential route into the country's domestic payments infrastructure if the relevant partnerships and approvals come together.  

PhonePe comes into the market with substantial experience from India, where it says it has more than 720 million registered users and an acceptance network covering more than 50 million merchants. Much of that growth has been built around UPI's common infrastructure connecting banks and payment applications. The UAE is a different operating environment, with its own banks, payment rails and regulatory requirements, which makes the company's decision to work through local financial institutions particularly important to how the expansion develops.  

No commercial launch date has been announced. PhonePe is still working with the UAE authorities on the requirements for final approval, after which it plans to establish the local partnerships and technology arrangements needed for the business. Its existing UPI presence gives the company a useful entry point, but the UAE operation will ultimately have to stand on its own within the country's payments system. 

The UAE gives PhonePe a natural starting point because of its large Indian population and close economic ties with India, but the company will still have to build relationships with local banks, payment providers and domestic payment networks. The next stage will show how much of the business PhonePe built around UPI can be adapted to the UAE and how much will need to be developed specifically for the market.  

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