Ecommerce firm Flipkart confirmed to MediaNama that it has bought payments company PhonePe. The PhonePe team will transition to Flipkart but will function as an independent business unit. A report by Mint says that the size of the deal was in the range of $10-20 million.
PhonePe was started by three former Flipkart employees Sameer Nigam, Rahul Chari and Burzin Engineer in December 2015. PhonePe is yet to launch a product but it says that it is the first payments company to utilize the NPCI’s unified payments interface (UPI). UPI, planned to go live in this April, will allow users to transact using their unique identification and mobile phone number or virtual payments address without sharing any other bank details. In contrast to the present payments process, which involves entering numerous account/card details and multi-level interventions, UPI will provide a secure hassle-free digital payments experience.
This is Flipkart’s third acquisition in the payments space.
In September 2015, it acquired majority stake for Rs 45.4 crore in FX Mart, which holds a prepaid payments instrument license from the Reserve Bank of India (RBI). At that time, Flipkart was not planning to use the payment service on its own platform, but instead offer this service on third-party sites and apps later. Apparently, two senior Flipkart executives had also joined the board of FX Mart.
It had acquired 65.71% stake in mobile payments platform ngpay in December 2014, which was set up in Singapore. Flipkart’s investment in ngpay assumed significance as the company had begun phasing out its own payments gateway Payzippyin August 2014 after the RBI did not grant it a semi-closed wallet licence in 2013, for which it had applied in July 2013.
Testing wallet services
Earlier last month, Flipkart confirmed that it is testing a pilot digital wallet service named ‘Flipkart Money’, primarily aimed at cutting costs while handling cash refunds. Flipkart Money will be a semi-closed wallet, and is currently being tested on the Flipkart Android app. Users can top-up the wallet with a maximum amount of Rs 25,000, every month. Cash from the wallet can also be transferred to credit cards or to bank accounts. The wallet service can only be used for payments and refunds on the Flipkart site.
Recent Flipkart developments:
– In February, Flipkart shut down its grocery delivery service ‘Nearby’ just five months after its launch in October 2015. A Flipkart spokesperson told MediaNama that the service was an experiment for understanding efficiencies and operations of a hyper-local business.
– In December 2015, Flipkart exited its e-books business saying that the division was not a strategic fit for the company. It added that the ebooks purchased on the platform would be serviced by Canada’s Rakuten Kobo. The company had launched its ebooks section in 2012.
– Last month, Flipkart launched same-day seller service called ‘Spotlist’ for sellers including SMEs, artisans, and other businesses across the country.