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Slice Challenges Paytm and PhonePe with Merchant Payments Expansion

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  Published in Business and Finance on Sunday, February 22nd 2026 at 5:24 GMT by moneycontrol.com
      Locales: Delhi, Maharashtra, INDIA

Bangalore, India - February 22, 2026 - Fintech disruptor Slice, previously known for its successful Buy Now Pay Later (BNPL) services, is dramatically expanding its footprint, directly challenging the dominance of Paytm and PhonePe in the Indian merchant payments and lending landscape. The company announced today a strategic partnership with an unnamed small finance bank, enabling it to offer a comprehensive suite of financial services to businesses across the country.

For years, Paytm and PhonePe have effectively controlled the vast majority of merchant payments in India, benefiting from early adoption and a robust network effect. However, Slice believes there's significant room for innovation and a demand for alternative solutions, particularly those built with a focus on the evolving needs of modern businesses. The partnership with the small finance bank provides Slice with the necessary banking infrastructure to process payments, extend credit, and manage financial risk - capabilities previously outside the reach of the purely fintech-focused company.

"We see a huge opportunity to empower merchants with seamless payment acceptance and accessible lending solutions," stated a Slice spokesperson in a press briefing. "This collaboration allows us to combine our fintech expertise with the bank's established infrastructure to create a compelling value proposition for businesses of all sizes. We aren't simply replicating what exists; we're building a platform that anticipates the future needs of merchants, particularly those in the digitally native space."

Beyond Buy Now Pay Later: A Broader Fintech Vision

Slice's journey from a niche BNPL provider to a broader fintech platform reflects a wider trend within the industry. Startups initially focused on singular financial products are increasingly realizing the benefits of diversification. Offering a more holistic suite of services - encompassing payments, lending, and potentially insurance or investment options - not only increases revenue streams but also enhances customer loyalty. This strategy allows companies to capture a larger share of the customer's financial life and reduces reliance on a single, potentially volatile market segment.

Analysts predict that the BNPL market, while still growing, is facing increasing regulatory scrutiny and potential saturation. Slice's proactive move into merchant services demonstrates a strategic awareness of these challenges and a desire to build a more sustainable business model. The company aims to become a one-stop financial shop for merchants, offering everything from simple payment processing to working capital loans.

Navigating the Regulatory Landscape

The expansion into merchant payments and lending isn't without its hurdles. The Reserve Bank of India (RBI) has been increasingly vigilant regarding fintech companies, particularly those involved in BNPL and digital payments. Recent regulations have focused on transparency, data security, and consumer protection, requiring companies to adhere to stricter compliance standards. Slice will need to demonstrate robust risk management practices and ensure full compliance with all applicable regulations to maintain its license and operate effectively.

The RBI's increased scrutiny is a direct response to the rapid growth of the fintech sector and the potential risks associated with unregulated financial innovation. While the RBI supports innovation, it is equally committed to safeguarding the financial system and protecting consumers. Slice's partnership with a licensed small finance bank is a clear indication that the company is taking these regulatory concerns seriously.

Phased Rollout and Future Expansion

Slice plans a phased rollout of its new merchant services, beginning with select cities in India over the next quarter. The initial focus will be on small and medium-sized businesses (SMBs), a segment often underserved by traditional financial institutions. The company intends to leverage its data analytics capabilities to offer tailored lending products and personalized financial solutions to these merchants.

Looking ahead, Slice is actively exploring partnerships with other financial institutions and technology providers to further expand its reach and product offerings. Potential areas of expansion include supply chain financing, point-of-sale (POS) solutions, and integration with e-commerce platforms. The company also hinted at plans to explore cross-border payment solutions, catering to the growing needs of Indian businesses engaged in international trade. The ambition is clear: Slice aims to become a major player in India's rapidly evolving fintech ecosystem, and the challenge to Paytm and PhonePe has officially begun.