In a bid to expand its online merchant base, PhonePe has tied up with digital payments company PayU, a release from the company said. The partnership will enable PhonePe as a payment option when using PayU’s online gateway system, the release added.

Through this partnership, the Flipkart owned payments service will hope to leverage the four lakh plus online merchants that PayU claims to have. According to the release, PayU has a market share of 90% of the entire e-commerce business in India. On the other hand, the merchant base of PayU will hope to get a boost in its sales owing to PhonePe’s users.

PhonePe’s funding & expansion

Last month, Flipkart Payments, the Singapore-based subsidiary of the e-commerce giant, infused Rs 451.66 crore into PhonePe. This followed Flipkart’s earlier investment of Rs 518 crore in PhonePe in March this year. The investment is part of the $500 million commitment Flipkart made to invest in PhonePe last year, in addition to the $75 million funds it infused since acquiring PhonePe in 2015.

The massive amounts of investments coincided with PhonePe launching a variety of new services this year, including tie-ups with IRCTC, GoibiboRedBus, Mumbai Metro and Ola Cabs whose services would be available in the PhonePe app.  PhonePe has also been building its offline payments business to expand its customer base. To this effect, the company acquired Zopper Retail, a hyperlocal point-of-sale platform for small and medium businesses. PhonePe also developed its own PoS (Point of Sale) device based on Bluetooth technology to process and boost its offline transactions. It has also reportedly tied up with several retail chains including Café Coffee Day, Apollo Pharmacy, Barista, Spencer’s, KFC, FoodWorld, Pai International and Goli Vada Pav.

All the investment and partnerships appear to have paid off as PhonePe claimed that it was the largest UPI-based payments player in the country with a 40% share of the market in July. According to data from the National Payments Corporation of India (NCPI), Unified Payments Interface (UPI) has reported 235.6 million transactions in July. While PhonePe had said that it clocked over 100 million monthly transactions in July, its biggest competitor Paytm reportedly registered 73 million transactions in the month.

Competition in payments space

Although the payments system was already extremely competitive in India, things have intensified even more in the last few months. India’s largest payments company, Paytm has raised an undisclosed amount from Berkshire Hathaway this week. The company also partnered with Alibaba to launch its artificial intelligence (AI) cloud computing platform Paytm AI Cloud in India.

Google announced that it would rebrand its UPI payment app Tez to Google Pay, bundled with additional features. On other hand, while India Post Payments Bank has finally begin operations this week, Amazon India also launched a bill payment service that will allow users to pay electricity, landline, broadband, gas and postpaid bills across  100 utility providers in the country.

This is apart from the countless other payment apps that already exist, and a bunch of others that are likely to launch soon, including WhatsApp, and Reliance Jio.