Ecommerce giant Flipkart is integrating digital payments giant Paytm’s e-wallet on its platform, allowing users to select the option at checkout. The move is surprising as it could have a detrimental effect on Flipkart-owned digital payments player PhonePe, which competes with Paytm in the digital payments landscape.
Paytm’s e-wallet and Unified Payments Interface (UPI) integration on Flipkart has begun and will be available for all users by next month, as Flipkart tries to step up sales during the festive season.
Flipkart’s decision to integrate Paytm’s payment options on its platform is far removed from the trend. While large etailers offer multiple payment options to their customers, they only integrate their own e-wallets, as done by Flipkart rival Amazon with Amazon Pay. A source told Times of India that Flipkart on-boarding Paytm is to help the company reduce cash-on-delivery orders in large metropolitan cities, where Paytm is seen to be popular.
Among the leading players in India’s competitive digital payments sector, Google Pay has emerged as a market leader with a 42% market share in terms of UPI payments. While PhonePe emerges as the second-largest digital payments platform with 35% market share, edging Paytm which comes third, the latter has claimed that UPI payments make up one component of the total number of digital payments.
A report by Redseer Consulting has also said that Paytm has a nearly 50% market share for digital payments to merchants (P2M), while PhonePe comes second with a 30% market share, followed by Google Pay at 10%.
With PhonePe and Paytm being in direct competition in the digital payments sector, it remains to be seen whether Flipkart’s decision to on-board Paytm on its platform goes down well with PhonePe, which reported a loss of INR 1904.72 Cr in the fiscal year 2018-19 (FY19), the last released financial results. In terms of revenue, the company raked in INR 245.8 Cr in FY19, a 401% growth compared to INR 49 Cr in the previous year. Its expenses grew 156% on a Y-o-Y basis reaching INR 2153.2 Cr in FY19. The FY20 earnings are yet to be released.