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Slice Teams Up with SBI Small Finance Bank to Challenge Paytm and PhonePe in India's Merchant Payments Arena

  //business-finance.news-articles.net/content/202 .. -phonepe-in-india-s-merchant-payments-arena.html
  Published in Business and Finance on Monday, November 10th 2025 at 22:50 GMT by moneycontrol.com

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Slice Takes on Paytm and PhonePe by Partnering with a Small‑Finance Bank to Offer Merchant Payments and Working‑Capital Loans

In a bold move that underscores the increasingly crowded landscape of India’s digital‑payment ecosystem, fintech firm Slice has announced a partnership with a small‑finance bank (SFB) that will see the launch of a new merchant‑payments platform and a short‑term lending product aimed at India’s vast network of micro‑businesses. The announcement, which was made on Moneycontrol’s “Technology & FinTech” front page, signals Slice’s intent to challenge the dominant players Paytm and PhonePe for the market share of merchant services, a segment that has traditionally been under‑served by the larger players’ focus on consumer‑facing payment solutions.

What Slice Brings to the Table

Founded in 2019, Slice has carved a niche for itself as a “credit‑for‑the‑gen‑Z” brand. Its flagship product, the Slice Credit Card, offers a no‑credit‑score‑required, digital‑only card that rewards users with cashback and exclusive offers for purchases on e‑commerce platforms, ride‑hailing services and food‑delivery apps. The brand has been backed by notable investors such as Accel, Sequoia and the Temasek‑led Fund of Funds.

While Slice’s consumer‑credit product has been a runaway success, the company’s latest initiative signals a strategic pivot toward the B2B side of the payments value chain. In a statement, Slice’s CEO, Harsh Pandey, said, “We’re building a platform that empowers merchants with seamless payment acceptance and instant working‑capital to keep their cash‑flow steady. It’s about building an ecosystem where merchants can transact digitally and grow at the same time.”

The Small‑Finance Bank Partner

The fintech’s new partnership is with SBI Small Finance Bank (SBI‑SFB), one of India’s largest and most trusted small‑finance banks. SBI‑SFB is a wholly‑owned subsidiary of State Bank of India that focuses on providing banking services to rural and semi‑urban populations, underserved micro‑entrepreneurs and women entrepreneurs. By leveraging SBI‑SFB’s regulatory approvals, deposit base and robust risk‑management framework, Slice is able to offer merchant‑payments solutions that meet strict RBI guidelines and also access a ready pool of liquidity for merchant lending.

“Partnering with SBI‑SFB gives us the confidence that we can scale our services at a national level while maintaining the compliance standards that Indian merchants expect,” explained Shilpa Singh, Head of Digital Banking at SBI‑SFB. “The synergy between our technology stack and the bank’s deposit and credit capabilities positions us well to capture the micro‑merchant segment.”

Two New Pillars – Payments & Lending

1. Merchant‑Payments Gateway

The new merchant‑payments product will allow small‑business owners to accept a range of payment modes – UPI, cards, net banking and QR‑code payments – all through a single, user‑friendly dashboard. The solution will be integrated with India’s Unified Payments Interface (UPI) and the Bharat Bill Payment System (BBPS) to enable instant settlement. Merchants will also be able to track transaction data, generate invoices, and receive analytics on footfall and sales trends.

“We’ve built a platform that is as simple for the merchant as it is powerful for us,” noted Pandey. “It’s about reducing friction so that merchants can focus on their core business.”

2. Short‑Term Working‑Capital Lending

Recognizing that many micro‑entrepreneurs struggle to secure timely working‑capital, Slice will offer a fintech‑enabled lending arm that will provide short‑term, low‑interest loans (typically 30–90 days) to merchants. The loans will be disbursed in a matter of minutes, with repayment linked to the merchant’s cash‑flow. The credit decisioning will use Slice’s data‑driven underwriting engine, which draws on transaction history, social media activity and other alternative data points.

“By using an alternative data‑based underwriting model, we can reduce the risk of default and offer competitive rates that are often unavailable through traditional bank loans,” explained Anil Gupta, Senior Product Manager at Slice.

Market Context & Competitive Landscape

India’s merchant‑payment market is projected to grow from ₹18.2 trn in 2023 to ₹32.4 trn by 2028, according to a report by Deloitte. The key drivers include the increasing penetration of smartphones, the push for a cash‑less economy under the RBI’s “Digital India” agenda, and the expansion of UPI usage across all age groups. However, despite this growth, a large portion of micro‑merchants remain stuck in a cash‑centric ecosystem, largely because they lack the digital infrastructure and credit access offered by the larger payment apps.

Paytm and PhonePe, each boasting millions of merchants across India, have recently launched their own merchant‑payment and credit solutions. Paytm’s “Paytm for Business” platform offers a payment gateway and a credit line of up to ₹10 lakh, while PhonePe’s “PhonePe for Merchants” provides UPI‑based acceptance and working‑capital loans. In this context, Slice’s new product suite positions itself as a differentiated, merchant‑centric alternative that prioritises transparency, speed and customer support.

Financial Outlook & Go‑to‑Market Strategy

Slice’s partner, SBI‑SFB, will provide the necessary regulatory and liquidity framework to support the loan products. SBI‑SFB’s net interest margin (NIM) of 4.8% will be leveraged to underwrite the credit risk, while Slice’s technology platform will capture a larger share of the merchant‑payment market. The company intends to roll out the services initially in metro and Tier‑2 cities where the digital‑payment adoption rate is high, before expanding to rural and semi‑urban areas.

The joint venture will generate revenue from transaction fees (0.3–0.5% per transaction), loan interest (8–12% per annum depending on risk), and value‑added services such as point‑of‑sale (POS) hardware leasing. Slice will also explore cross‑selling its consumer credit products to merchants who use the payment platform, thereby creating a virtuous cycle of growth.

Conclusion

Slice’s partnership with SBI‑SFB to launch a merchant‑payment gateway and a short‑term lending arm signals the fintech’s ambition to move beyond its niche consumer‑credit product and become a full‑fledged player in the B2B payments space. By combining Slice’s data‑driven technology with the regulatory expertise and liquidity of a small‑finance bank, the company is poised to capture a significant slice of India’s burgeoning merchant‑payments market. Whether this move will be enough to tilt the balance against entrenched giants Paytm and PhonePe remains to be seen, but it undeniably heightens the competitive stakes and underscores the importance of innovation in India’s digital‑payment ecosystem.