PhonePe makes its first acquisition, bags Tiger Global-backed PoS business Zopper Retail

Bengaluru-based payments player PhonePe on Monday announced that it had acquired hyperlocal service Zopper’s Point-of-Sale (PoS) business, Zopper Retail.

As a part of the deal, Neeraj Jain, Founder and CEO of Zopper, along with the startup’s engineering leadership team, will join PhonePe. As a part of the new role, Neeraj will be heading product for offline merchant solutions for the payments player.

The acquisition is part of PhonePe’s strategy to aggressively ramp up its offline business. Further, Zopper Retail’s CRM for sales, inventory, workforce, loyalty and membership management will complete the offerings for PhonePe merchants, helping it add a better value proposition.

Last October, the payments company had launched an indigenous PoS device for its offline merchants. Sources say that its competitor Paytm is also working hard to launch a similar offering soon.

In a press note, PhonePe stated that investing in the growth of digital transactions at offline merchant locations forms a very important part of the PhonePe strategy.

This is true considering one of the major worries for Flipkart-owned PhonePe continues to be its offline network. Just last month, while announcing its annual payment value run rate of $20 billion, the company said that it had an offline merchant network of only 300,000 on its platform. Around the same time the company had also shared that it was doing close to one million offline transactions on a monthly basis.

This is a stark contrast from its competitor Paytm, which claims to have close to seven million offline merchants on its platform.

Speaking on the acquisition, Sameer Nigam, CEO at PhonePe, said,

“We welcome the Zopper Retail team to PhonePe and are excited to leverage their domain expertise to rapidly expand our offline merchant network across India. Zopper has a very strong technology and innovation DNA, and Neeraj and team are also a great culture fit for PhonePe. Zopper Retail is specifically designed to meet the needs of millions of small retailers in India, and their strategy ties in very well with our overall vision of making digital payments universally accepted across the country.”

Further, Zopper Assure, Zopper’s other business line including affinity programmes and extended warranty, will be separate and will continue to be a part of Zopper. Surjendu Kulia, Co-founder and COO of Zopper will be heading the same.

Neeraj Jain, CEO, Zopper commented,

“Zopper has a strong technology ethos and in PhonePe we have found a like-minded partner. By joining forces with PhonePe we strengthen our commitment of using technology for simplifying our merchant’s billing, payments and inventory management systems. Zopper’s other business line comprising affinity programs and extended warranty will drive the growth of Zopper in the future, and Surjendu will be spearheading it.”

Noida-based Zopper’s investors include Flipkart’s investor Tiger Global as well as early-stage investors Blume Ventures and Nirvana Venture Advisors.

With more than 100 million users, this isn’t the only move for PhonePe to increase its transactions. Last month, YourStory reported that PhonePe is vying to become a ‘local-discovery’ platform through its in-app store strategy, aiming at taking local kiranas online.

It is also looking to partner with brands that would provide custom services and offers for only PhonePe customers.

At the same time, it onboarded Ola as its second large in-app merchant on the platform.

India’s hyperlocal startups were hit the most last year, seeing multiple shutdowns. But the sector seems to be recovering in the first half of 2018. In the first half of 2018, hyperlocal delivery startups raised $82.6 million in funding. During the same period last year, the amount raised was $15.2 million.

According to YS Research, the hyperlocal space racked up 10 deals in first half of the year, as compared to 5 deals in H1 2017. In 2015, a slew of hyperlocal startups in different segments, like Doormint, Peppertap, Turant Delivery and several others, couldn't survive the funding crunch towards the end of the year and through 2016.

However, there is rekindled faith in hyperlocal keeping an eye on operational efficiencies and costs.