In its bid to enable financial services access in the country, Bengaluru-based digital payments company Phonepe today announced a new savings product called Liquid fund.
The company said that with this the users can begin saving with as low as INR 500 in a completely secure and paperless process in less than five minutes. Under Liquid Funds, the money is invested in safer instruments such as bank and government securities. Further, users can withdraw their money instantly as there is no lock-in period or a minimum balance.
Phonepe’s Liquid Fund product is targeted at users across India including those from smaller towns and cities, who have never experienced any solutions beyond savings accounts. The company claims to see over 56% of its transactions from Tier 2 and Tier 3 cities.
Terence Lucien, head of mutual funds, Phonepe, said, “This is our second product in the Mutual Funds space after Tax Saving Funds where we have created a completely digital investment flow for our users. We will continue to add more such financial solutions for our users to manage their money and fulfill their life aspirations in a better way.”
Phonepe claims to have over 175Mn users and provides them with its “super-app”, which integrates 50 digital apps including Goibibo and Oyo. Phonepe earlier said that growth has come riding on the back of the exponential expansion of Phonepe’s merchant network, both online and offline.
In 2019, the company also launched a new feature ‘Switch’, which allows users to use apps for groceries, shopping, food and travel bookings without downloading any other application. With this, Phonepe planned to enhance users experience.
It also introduced a new concept of Stores. Under this, most of the offline stores, which are accepting payments via Phonepe now are available on the Phonepe store’s platform. Hence, users can directly call them or pay them at the store, without the need to scan QR-code.
The company has also shifted its focus on monetising the platform to eye profitability. Sameer Nigam, CEO and cofounder of Phonepe believes that the company can achieve profitability in the next three or four years with the help of an additional $1 Bn fund. According to Nigam, Phonepe has shifted its focus from giving cashback to providing merchant coupons, which has helped Phonepe to monetise its platform.
Through distributing financial services, Phonepe earns a distributor fee from the companies. As of now, the platform is providing only tax-saver mutual funds. Nigam had also said that the company is planning to foray in other categories such as liquid and debt funds.
Highlighting that there’s a huge opportunity in the wealth management space, Nigam said that with increasing disposable income in India, individuals have started to shift their focus from savings to growth. To further capture this burgeoning segment, Nigam revealed that Phonepe will also launch insurance services on its platform.
Phonepe was a major factor in Walmart’s acquisition of Flipkart in 2018. However, this year, Flipkart passed a resolution for Phonepe to evolve as an independent entity and since then speculation is that it is raising fresh funding of up to $1 Bn. Phonepe is already looking like the crown jewel of Walmart’s India empire. The company’s stupendous growth has continued to enchant investors and has helped it achieve a valuation of $7 Bn.
Morgan Stanley said that Phonepe could be worth as much as $20 Bn in the bull case. The data outlines that Phonepe could generate revenue of $70 Mn from payments vertical in bull case, $690 Mn from the distribution of financial services, and $2.5 Bn from consumer lending by 2029.