E-commerce giant Flipkart committed on Thursday to make an investment of $500 million (roughly Rs. 3,254 crores) in PhonePe, a financial tech company it owns whose service by the same name is claimed to be the market leader among UPI-powered apps.
PhonePe will use the capital, Flipkart said, to scale up its technology, reach, and offering. The announcement comes less than a month after Google entered the payments market in India, with Google Tez, also opting to use UPI as the backend platform for transactions.
Prior to the capital commitment announced on Thursday, Flipkart has infused $75 million (roughly Rs. 488 crores) in PhonePe since acquiring it in 2015. The company said it sees much potential in the FinTech industry, which is undergoing a "paradigm shift" as mobile Internet penetration and usage improves in the country. India's digital payments sector is estimated to be worth $500 billion (roughly Rs. 3,253,980 crores) by 2020.
Sameer Nigam, co-founder and chief executive officer of PhonePe said the payments company will in particular use the investment to expand the merchant network and consumer base. "We have been growing at over 100 percent every two months this year, and this investment will help us maintain the same aggressive growth rate for the next two years," he said in a press statement.
"PhonePe is a critical part of our overall strategy at Flipkart to build a comprehensive ecosystem for our customers. We're fully committed to make PhonePe the most preferred digital payments app in India," said Binny Bansal, Group CEO of Flipkart.
As of August, PhonePe accounted for 45 percent of all transactions on the UPI platform, according to data published by RBI. India's digital payments sector has attracted the attention of several major companies, including Silicon Valley and other international players. Samsung entered the payments space in India earlier this year with the launch of Samsung Pay in India.
Last month, Google launched Tez in the country. Both Samsung Pay and Tez support the UPI platform. Amazon is also quietly scaling its Amazon Pay service in India. Facebook is planning to add a payments service to WhatsApp by the end of the year.