In the current scenrio, Flipkart might be facing multiple challenges ranging from employee exits to valuation markdowns. But India’s startup poster boy isn’t backing down, instead is planning to enter another business segment on a huge scale.
According to an ET report, Flipkart has planned a massive investment of Rs. 670 crores to build an independent payments business. The business will be in the form of PhonePe which Flipkart acquired in April this year.
And unlike other players(ahem! Paytm), Flipkart is not relying on digital wallets but on a new upcoming technology developed by PhonePe. According to many experts, the technology called Unified Payment Interface (UPI) has the potential to revolutionise digital payments in India.
This is because it allows people to pay online directly from banks by using an unique ID. This eliminates the need for multiple steps of typing card details, passwords, etc. , while paying through net banking and debit or credit cards. The government of India has already approved the technology and Flipkart has big plans for using it.
Talking about the same, Binny Bansal, CEO of Flipkart said,
PhonePe will focus on building highly India-centric digital payment solutions. We have decided to build a new brand because PhonePe is addressing different consumer needs and the brand should reflect the same.
He further added that it was a long-term strategic bet and they believed PhonePe could become a huge independent brand in itself.
Sameer Nigam, founder of PhonePe and head of payments business at Flipkart says that they have designed PhonePe as an omni-channel product. It will act as a container for multiple payment solutions which also includes a semi-closed digital wallet. PhonePe has partnered with a large bank for deploying its UPI technology.
Initially, PhonePe will be available for customers on Myntra, recently acquired by Flipkart and for users of its logistic arm — eKart. Gradually , the company plans to roll out the platform to other digital platforms. Like PayTm, Freecharge and other online payment services at present, PhonePe will eventually enter offline payment segment as well enabling local stores, kirana shops with UPI.
Increasing focus on digital payments
Notably, this venture into payments business is not surprising. It is in line with CEO Binny Bansal’s vision of four pillars of Flipkart- commerce, logistics, payments, and advertising. Flipkart already has quite a strong presence in commerce and logistics while it has started focusing on advertising as well since last year.
And now with payments business, it is eyeing the online payments segment which expected to be huge in coming years. Like its advertising business, Flipkart seems to be taking an inspiration from Chinese giant Alibaba for payments as well.
Notably, the payments arm of Alibaba, Alipay is now a huge independent brand in itself. Earlier this year, it raised $4.5 billion in funding and was valued at $60 billion.
However, it is not just Flipkart which has its eyes on online payments. Its arch-rival Amazon also has plans of launching its own digital wallet as it has acquired Emvantage earlier this year. The other rivals of Flipkart — Snapdeal and Paytm already have a strong presence in online payments with FreeCharge(acquired by Snapdeal) and Paytm wallet respectively.