Flipkart injects $66 mn more into payments arm PhonePe

PhonePe Pvt. Ltd, the in-house digital payments arm of e-commerce firm Flipkart, has received another $66 million (Rs 451.66 crore) in fresh funds from its parent firm, filings with the Registrar of Companies revealed.

PhonePe received these funds from the e-commerce firm’s Singapore-based group entity Flipkart Payments Pvt. Ltd.

This is Flipkart’s third fund infusion into its payments arm this year. In March, it invested $75.6 million (Rs 518.22 crore) and in April, it put in $47.4 million (Rs 324.90 crore) into the entity.

A back-of-the-envelope estimate by TechCircle showed that PhonePe, as a standalone entity, now commands a valuation of around $658.79 million as a result of the latest funds infusion.

The current investment is likely to be part of the $500-million commitment that Flipkart had announced late last year.

At the time of that announcement, Flipkart’s chief executive Binny Bansal had emphasised that PhonePe was a critical part of their overall strategy to build a comprehensive ecosystem for its customers.

Phonepe, which claims to have crossed the 100-million user mark, says that the platform drives 70% of overall merchant transactions on the Unified Payments Interface, or UPI, network. Citing data released by umbrella body the National Payments Corporation of India (NPCI), PhonePe claimed that it clocked the highest number of UPI transactions in July. It accounted for 40% (around 94 million) of the 236 million UPI transactions that took place on the platform.

It also claimed to have surpassed 100 million overall transactions in July, inclusive of credit/debit card and wallet transactions. CEO Sameer Nigam had attributed this primarily to NPCI’s move to block UPI transactions where the sender and receiver’s bank account number are the same.

PhonePe competes with Paytm and Amazon Pay, both of which are vying to capture a sizeable portion of the consumer wallet market in India. In the past, PhonePe objected to Paytm’s claims of leadership in the UPI transactions space, referring to it as “uni-dimensional and misleading”.

As part of its efforts to strengthen its offline network as well as to simplify merchant’s billing, payments and inventory management systems, PhonePe acquired TigerGlobal-backed point of sale software-as-a-service platform Zopper for an undisclosed sum last month.

For the financial year 2016-17, PhonePe’s financials plunged deeper into the red as its net loss expanded 32 times to Rs 129 crore, from Rs 4 crore in the year before. Total expenditure also surged 29 times to Rs 146 crore from Rs 5 crore.

However, net sales showed a 16-fold growth to Rs 3.03 crore for 2016-17 from Rs 19 lakh the year before.