SoftBank-backed Flipkart today said it will invest $ 500 million in PhonePe to scale up operations of its payments arm.
The commitment is in addition to the $75 million infused by Flipkart in PhonePe since the acquisition in 2015, Flipkart said in a statement.
The announcement comes a day after the Reserve Bank of India said interoperability of e-wallets will be enabled in phases. In subsequent phases, interoperability will kick in between wallets and bank accounts through the Unified Payments Interface, the central bank added.
While Flipkart did not specify the period over which the funds will be infused, PhonePe co-Founder and CEO Sameer Nigam said “this investment will help us maintain the same aggressive growth rate for the next two years”. The investment will be used to scale up PhonePe’s technology platforms and expand merchant network and consumer base rapidly, he added.
PhonePe has been growing at over 100 percent every two months this year, Nigam said.
Binny Bansal, Group CEO, FlipkartFintech 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.
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 e-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 Rs 2,000 crore. Besides, Amazon Corporate Holdings and Amazon.com had pumped in Rs 130 crore into Amazon Pay India.
The fintech ecosystem in India, especially payments, is undergoing a paradigm shift with booming mobile Internet usage and increasing adoption of digital platforms by people.
Estimates suggest that India’s digital payment sector is estimated to grow to $500 billion by 2020, representing around 15 percent of GDP, up from around $50 billion last year.
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 in September.
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