In one of the largest commitments in the Indian payments space, e-commerce marketplace Flipkart on Wednesday announced an investment commitment of $500 million in its group company, PhonePe.
The investment, which is to help PhonePe rapidly scale up its technology, reach, and offerings, adds to the $75 million Flipkart has infused in PhonePe since acquiring it in 2015.
PhonePe is the Unified Payments Interface (UPI) payments application from Flipkart, which is merged with a wallet licence from FX Mart, one of Flipkart's other acquisitions in September 2015.
Speaking about the investment, Binny Bansal, Group CEO of Flipkart, said,
“Fintech and e-commerce are among the most visible faces of a new digital India that is powered by the youth and technology, and both are set for outstanding growth. PhonePe is a critical part of our overall strategy at Flipkart to build a comprehensive ecosystem for our customers. We’re fully committed to making PhonePe the most preferred digital payments app in India.”
Sameer Nigam, Co-founder and CEO, PhonePe, said,
“The investment will be used to scale up our technology platforms and expand our merchant network and consumer base rapidly. We have been growing at over 100 percent every two months this year, and this investment will help us maintain the same aggressive growth rate for the next two years."
Sameer also stated that the company is committed to helping the government realise its Digital India vision and achieve its target of 25 billion digital payment transactions by next year.
On the back of Flipkart’s Big Billion Days sale this year, PhonePe claimed to have recorded over 16 million transactions in September 2017.
In a press statement, PhonePe stated that its annual run rate, as a result, touched a new high of $ 3.5 billion in terms of Total Payments Volume (TPV) in September. This ramp-up is the fastest in the Indian digital payments space.
This is a sharp rise since May when PhonePe clocked 5.5 million transactions, of which 3.5 million were on UPI while the rest were on a card or the wallet.
Speaking to YourStory in July, PhonePe Co-founders Sameer Nigam and Rahul Chari didn’t deny the possibility of getting into financial services. Sameer had said,
“We want to do credit and would want to do lending, perhaps. So, what if we could give people a virtual credit line they can use? The same goes for products like mutual funds and insurance.”
The data of 16 million transactions and now the ammunition from Flipkart could mark the aggressive entry of the payments player into financial services.
Earlier this month, the firm also released credit card bill payments, a development that had been said to be in the pipeline for a long time.
Moreover, in the previous conversation, the founders also stated they plan to successively add features that allow consumers to not just check their bank balances but also download bank statements, thus possibly disrupting the applications of various banks.
While UPI is known best for its peer-to-peer transaction network, the call of the hour has been to grow the merchant and offline acceptance, focusing on the peer-to-merchant strategy which PhonePe seems to be actively concentrating upon.
Through the dynamic QR and integrations with partners like PineLabs, PhonePe was expecting to be live in 15 national chains across 18,000–20,000 outlets.
The total number of offline merchants on the PhonePe platform as of July 2017 stood at 25,000.