India’s largest ecommerce player Flipkart has announced an investment of $500 million into its payments arm PhonePe to scale up operations. As per a Mint report, this commitment is in addition to the $75 million that Flipkart has so far invested in PhonePe since it acquired it in 2015.
The announcement comes a day after the Reserve Bank of India announced that it will be enabling inter-operability of e-wallets in phases.
As per Flipkart’s statement, this is one of the largest single investment commitments in the Indian FinTech space, thus reflecting the opportunities in the segment.
Sameer Nigam, co-founder and CEO of PhonePe told Mint that the investment will help the UPI payments company maintain an aggressive growth rate over the next two years. He claims that PhonePe has been growing at over 100% every two months this year.
The investment, he says, will be used to scale up PhonePe’s technology platforms and to expand merchant network and consumer base rapidly.
“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,” Mint quotes Flipkart Group CEO Binny Bansal as saying.
Flipkart acquired PhonePe, formerly known as FX Mart in April 2016 and Singapore-based umbrella entity Flipkart’s subsidiary Flipkart Payments has a controlling stake in PhonePe.
This infusion of funds into PhonePe comes soon after Flipkart receiving a massive funding of $2.5 billion from Japanese conglomerate SoftBank. Prior to that, Flipkart raised $1.4 billion from Microsoft, Tencent and eBay in April.
Amazon India too, reports suggest, is looking to increase its investment in its payments arm Amazon Pay by nearly five times. As per the company’s MCA filings, Amazon has already increased the authorised capital of its Amazon Pay from $61.5 million to $307.7 million over the last few months for expansion of business operations. The investments into the digital payments arm are likely to increase over the next 6-12 months.
At a time when the digital payments market is growing significantly, Phonepe is rapidly scaling its operations with UPI as its competitive edge. Its monthly transactions grew 800% since December 2016, generating an annual payment volume of $2.5 billion in July. In fact, the company claimed to have overtaken Bharat Interface for Mobile (BHIM) app in terms of total transactions with a 45% share in August.
In August, PhonePe told The News Minute that it will continue to add more use cases to the app and go big on offline payments as well, which it rolled out in July. The next big step for PhonePe is offering financial products.