Ecommerce giant Flipkart has announced that it will launch a digital wallet to build an independent digital payments business. For the same, it plans to invest over $100 Mn (INR 670 Cr), int eh next three years.
The project will be led by PhonePe, a mobile payment app. In April 2016, Flipkart acquired PhonePe for an undisclosed amount. Under the terms of acquisition, PhonePe team moved to Flipkart but continued function as an independent business unit.
PhonePe is a mobile payments app that allows users to transfer money instantly from mobile phones by using unique identification number (Aadhaar) or a virtual payment address. It was founded in 2015 by former Flipkart employees Sameer Nigam, Burzin Engineer and Rahul Chari.
The digital wallet will reportedly be ready to use in the coming weeks. It is expected to reduce Flipkart’s dependency on cash transactions. The product will be built on the government-approved technology platform — Unified Payments Interface. In April 2016, former RBI governor Raghuram Rajan launched Unified Payment Interface (UPI) to make ecommerce transactions easier. The transaction limit is set at INR 1 Lakh.
As of now, the digital wallet will be available to customers on the Flipkart and Myntra, and users of logistics service provider eKart. It is expected to be rolled out, for use across other digital sites, later.
As per PwC, about 800 Mn people will have access to online payment options in India by 2019. Also, the volume of payments through prepaid payment instruments jumped 77% till July this year to INR 24,124 Cr.
As mobile app payment services grow in India, digital wallet apps like Paytm, MobiKwik, PayUMoney, etc. are expanding. Earlier this month, Gurgaon-based online managed marketplace, ShopClues, acquired mobile payments startup Momoe Technologies. Prior to this in May, Starbucks announced to launch its mobile payment app this year.