PhonePe Wins In-Principle Nod From UAE Central Bank, Marking Its First Regulatory Clearance Outside India

PhonePe, India's largest digital-payments platform by UPI volume, has secured in-principle approval from the Central Bank of the UAE for two licences, marking its first regulatory clearance outside its home market and opening the door to a new phase of international expansion for the Walmart-backed fintech.

The approvals cover Retail Payment Services and Card Schemes, and Stored Value Facilities, according to details reported on 22 September 2026. They follow the completion of initial regulatory due diligence and allow PhonePe to work towards final approval, after which it could begin operations in the Emirates.

The company has said that, once it receives final clearance, it plans to collaborate with regional banks and licensed payment providers, and to explore support for the UAE's domestic payment rails, Aani and Jaywan.

A licence, not yet a launch

It is important to be precise about what the approval means. An in-principle nod is a conditional green light rather than an operating licence. PhonePe cannot yet offer services to UAE residents and will need to satisfy the central bank's remaining requirements before it goes live. Regulators in the Gulf have tightened oversight of payment firms in recent years, with a strong focus on anti-money-laundering controls, consumer protection and data governance.

Still, the milestone is significant. For an Indian fintech, securing a regulatory foothold in a major financial centre is a substantially more demanding step than enabling Indian travellers to pay abroad through partnerships. It signals an ambition to serve local customers and merchants rather than simply extend a domestic product across borders.

The market already speaks UPI

The UAE is a natural first market for an Indian payments company. The country is home to one of the world's largest Indian diaspora communities and receives millions of Indian visitors each year. Commercial and remittance corridors between the two countries are among the busiest in the world.

The UAE has also been one of the most active partners in India's effort to internationalise its payments infrastructure. NPCI International Payments Limited, the overseas arm of the National Payments Corporation of India, has worked with UAE institutions on UPI acceptance, and the UAE's domestic card scheme, Jaywan, was built using technology from NPCI International. That shared architecture could lower integration costs for PhonePe and make its product feel familiar to a large segment of potential users.

PhonePe already allows Indian travellers in the UAE to pay by scanning local QR codes through a partnership with NPCI International Payments. What the new licences could add is the ability to serve customers who live in the UAE and transact in dirhams, a much larger and more commercially valuable opportunity.

Scale at home, test abroad

At home, PhonePe's scale is formidable. The company says it has more than 72 crore registered users life-till-date in India, and it has long held the leading share of the country's UPI transactions. That scale has been built on a zero-merchant-discount-rate regime for UPI, which has kept payments free for users and merchants but has forced payments companies to look for revenue in lending, insurance, wealth products and merchant services.

The UAE offers a different economic proposition. Card-based payments remain widespread, merchant fees are an established revenue source, and higher average transaction values could support better unit economics than the Indian market. At the same time, PhonePe will be competing with well-capitalised incumbents, including global card networks, regional banks with strong digital offerings, and international wallet providers already operating in the Gulf.

Why it matters for India's fintech ambitions

PhonePe's move also carries strategic weight beyond its own balance sheet. India has made the global export of its digital public infrastructure a policy priority, and UPI linkages have been established with a growing number of countries. But most of that expansion has been driven by government-to-government agreements and NPCI's international arm. A private Indian fintech obtaining its own licence in a major Gulf market represents a more commercial expression of the same ambition.

If PhonePe succeeds, it could provide a template for other Indian fintech firms seeking to follow the diaspora into markets such as Saudi Arabia, Singapore and the United Kingdom. If it struggles, it will highlight how much harder it is to win customers abroad without the network effects and regulatory tailwinds that fuelled growth at home.

What PhonePe brings to the Gulf

PhonePe's core strength is its ability to process enormous transaction volumes reliably and at very low cost. Operating the largest share of UPI traffic in India has required the company to build infrastructure capable of handling spikes during festivals, salary days and flash sales, while maintaining uptime and fraud controls. That operational muscle is not easily replicated, and it could translate into a competitive advantage in a market where consumers and merchants expect instant, dependable payments.

The company also brings experience of building merchant networks from the ground up. In India, PhonePe spread QR-code acceptance to millions of small shops, kiranas and informal businesses, often in towns where card terminals were rare. The UAE's merchant landscape is more formal and more card-heavy, but there remains a large base of small retailers, service providers and community businesses, many run by members of the South Asian diaspora, that could benefit from low-cost digital acceptance.

Finally, PhonePe has experience with the broader financial products that sit on top of payments, including insurance distribution, mutual funds and credit partnerships. Whether regulators in the UAE will allow it to replicate that model is uncertain, but the capability is there if the licence structure permits it.

The regulatory road ahead

Several questions remain unanswered. PhonePe has not disclosed a launch timeline, the specific products it will offer first, or the size of the team it intends to build in the UAE. Nor has it said how its UAE business will be structured relative to its Indian operations, which are preparing for a public listing.

That last point matters. Investors evaluating PhonePe's eventual IPO will want to know whether international expansion is a disciplined, capital-light extension of existing capabilities or an expensive bet that could weigh on profitability. A licensed entity in a regulated financial centre, built on shared payments rails and a familiar customer base, is arguably the most defensible version of that bet.

For now, the in-principle approval gives PhonePe what every fintech needs before it can compete: permission. The harder task, winning the trust and daily transactions of UAE residents and merchants, begins once the final licence is granted. For the millions of Indians who live and work in the Emirates, it could soon mean a familiar name in their payments app, operating under local rules and local currency.