Flipkart plans to pump in Rs 670cr to build its own payments biz

Even though Flipkart is battling senior employee exits and overall funding gloom, besides fighting competition like Amazon, the company refuses to back down. Flipkart, which was once a poster boy in the startup space, now plans to introduce its own, independent payments business, taking on the likes of Paytm.

The move is in line with Flipkart’s goal to cover the four pillars the company aims to achieve, namely--commerce, logistics, payments, and advertising. Flipkart already has quite a strong presence in commerce and logistics while it has started focusing on advertising as well since last year.

Now, the company plans to develop the payments pillar and will invest to the tune of Rs. 670 crore in building the payments business, which will be in the form of PhonePe that Flipkart acquired in April this year. But unlike Paytm, Flipkart is not relying on digital wallets but on a new upcoming technology developed by PhonePe, called Unified Payment Interface (UPI).

The technology allows people to pay online directly from banks by using a unique ID. This eliminates the need for multiple steps of typing card details, passwords, etc. while paying through net banking and debit or credit cards. The government of India has already approved the technology and Flipkart has big plans for using it.

“PhonePe will focus on building highly India-centric digital payment solutions. We have decided to build a new brand because PhonePe is addressing different consumer needs and the brand should reflect the same,” Binny Bansal, CEO of Flipkart said.

Sameer Nigam, founder of PhonePe and head of payments business at Flipkart says that they have designed PhonePe as an omnichannel product. It will act as a container for multiple payment solutions that also includes a semi-closed digital wallet. PhonePe has partnered with a large bank for deploying its UPI technology.

Initially, PhonePe will be available for customers on Myntra and eKart. It will eventually enter offline payment segment also, enabling local stores, Kirana shops with UPI, much like PayTM and Freecharge.