PhonePe is fast becoming a distribution engine, leveraging the large base of 450 million registered users to cross-sell products such as insurance, lending and other services.
With a $12 billion valuation, PhonePe is India’s most valuable fintech; and the Indian digital payments company has bold growth plans.
Walmart, PhonePe’s majority shareholder, just invested $200 million into the startup, helping it reach $650 million in recent weeks as part of an ongoing round to raise $1 billion.
PhonePe, Google Pay and Paytm account for 96.5% of the transactions on the real-time Unified Payments Interface (UPI) network developed by the National Payments Corporation of India (NPCI).
Launched in 2016, the UPI network facilitates inter-bank, peer-to-peer and person-to-merchant transactions and has become India’s default means of payment. According to NPCI, in January 2023 alone, over eight billion transactions were processed on the scheme; and it has helped e-commerce payments grow to $12 billion—up 53% from 2021 to 2022.
The PhonePe app went live in August 2016 and now commands about 50% market share, putting the Bengaluru-headquartered firm on course to process transactions worth $1 trillion annually.
This makes Walmart’s $1 billion bill to the Indian government for taxes arising from PhonePe’s redomiciling from Singapore to India in October 2022 look like money well spent.
“I believe India is going to be the largest market in the world this year, surpassing China,” said Walmart CFO John David Rainey on the annual institutional investors call. “It’s a promising opportunity in the future.”
PhonePe is fast becoming a distribution engine, leveraging the large base of 450 million registered users to cross-sell products such as insurance, lending and other services. It also plans to build and scale wealth management, lending, stockbroking, Open Network for Digital Commerce (ONDC)-based shopping, account aggregation,and businesses.
ONDC is India’s open protocol to enable local commerce across segments. It aims to support micro, small and medium enterprises and small traders in their online efforts. For example, PhonePe is working on an unnamed hyperlocal grocery delivery app.