Flipkart commits $500 million investment in PhonePe

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PhonePe, a mobile payment app could change the e-wallet category in the country, with Flipkart committing to invest $500 million in the company. This investment could help PhonePe take on rival Paytm, which raised $1.4 billion from SoftBank in May this year.

PhonePe
The investment could help PhonePe increase its customer base. (Image courtesy Phonepe.com)

With the government pushing for digitisation of services, the mobile wallet category has seen tremendous growth. This investment commitment from Flipkart can be viewed as a strategic step to keep up with internet giant Amazon, which has also entered the segment through Amazon Pay, having invested Rs.130 crore into the entity recently.

While there is no clarity on the time period over which the funds will be disbursed, it should be sufficient to help PhonePe manage its operations for a period of two years. The amount is likely to be used to ramp up technology, helping it increase its customer base.

Paytm currently dominates the Indian mobile wallet category, with approximately 300 million users, with PhonePe having around 45 million users.

The digital/mobile payment industry of the country is expected to be valued at around $500 billion by 2020, with investors gearing up for this.

The investment commitment coincides with the Reserve Bank of India’s decision to release new regulations for mobile wallets, which could result in an increase in the operating costs of these companies. PhonePe might be at an advantage when compared to its competitors thanks to this investment.

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