Flipkart to pump $500 mn into payments arm PhonePe
13 October 2017
Ecommerce leader Flipkart today said it will invest $500 million in its UPI-based payments arm PhonePe to scale up its operations.
The commitment is in addition to the $75 million infused by Flipkart in PhonePe since its acquisition in 2015, Flipkart said in a statement. It did not specify the time period over which the funds will be infused.
Flipkart, flush with funds from SoftBank and others after recent funding rounds, added that this is one of the largest single investment commitments in the Indian fintech payments space and "is reflective of the opportunities" in the segment.
The announcement comes a day after the Reserve Bank of India said inter-operability of e-wallets will be enabled in phases. Also, in subsequent phases, inter-operability will kick in between wallets and bank accounts through the UPI (Unified Payments Interface).
PhonePe co-founder and chief executive Sameer Nigam said, "This investment will help us maintain the same aggressive growth rate for the next two years." He added that the investment will be used to scale up PhonePe's technology platforms and expand merchant network and consumer base.
He also noted that PhonePe has been growing at over 100 per cent every two months this year.
"Fintech and ecommerce 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," Flipkart Group chief executive Binny Bansal said.
Flipkart is keen to rapidly scale up the technology, reach and offerings of PhonePe. Formerly known as FX Mart Private Ltd, PhonePe competes with the likes of Amazon Pay, Paytm, and Mobikwik.
Payments could play a critical role for -commerce companies that are aggressively expanding their operations in the country.
Flipkart's rival Amazon has also been ramping up efforts to strengthen its digital payments platform, Amazon Pay. Earlier this month, it increased the authorised share capital of the company by five times to Rs2,000 crore.
Also earlier this, Amazon Corporate Holdings and Amazon.com Inc had pumped in Rs130 crore into Amazon Pay India.
The World Payment Report 2017, jointly commissioned by Capgemini and BNP Paribas, said India could potentially make its way into the top 10 markets globally in terms of non-cash transaction volumes. It added that non-cash transactions may grow at a CAGR of 26.2 per cent during 2016-2020.
According to the National Payments Corporation of India, the country is expected to witness a six-fold growth in digital transactions to reach 25 billion during 2017-18, up from 4 billion in 2015-16.
PhonePe, which claims to be a leader in UPI payments space, said it registered over 16 million transactions in September this year. Its annual run rate touched a new high of $3.5 billion in terms of total payments volume (TPV) in September.