Flipkart today announced that it has acquired PhonePe, a Bengaluru-based mobile payments startup. The new acquisition is appeared to be a competitive move by the e-commerce company to rival major mobile payments players like Paytm and MobiKwik.
Financial terms of the deal were undisclosed. However, Flipkart confirms that PhonePe “will function as an independent business unit” and will continue its work on Unified Payments Interface (UPI).
“Payments has been one of the biggest hurdles for mass adoption of online shopping in India,” says Binny Bansal, CEO of Flipkart, in a statement. “UPI has the potential of transforming the entire payments ecosystem in the country. The acquisition of PhonePe is in-line with Flipkart’s focus on driving innovation on the payments front.”
Co-founded by former Flipkart employees Sameer Nigam and Rahul Chari in last December, PhonePe is aimed to build India’s first unified payments product using UPI, which was launched by National Payments Corporation of India.
The new product is expected to go live in April and is set to allow users to make payments simply using a unique identification on their mobile phones.
The product sketched by PhonePe will enable transactions without letting users share their bank details. This would bridge the gap between the present and future payments process and would give a “significant improvement” in the existing transaction experience.
“PhonePe’s mission is to significantly improve the online and offline digital payments experience for millions of Indian customers,” Nigam says. “We are really excited to merge with Flipkart and get access to one of the largest consumer bases in the country, which will allow us to realize our vision at a much larger scale.”
Flipkart is already one of the largest e-commerce companies in India. But when it comes to the emerging mobile payments trend, it hasn’t yet launched any of its proprietary models.
Contrary to Flipkart, Snapdeal has FreeCharge to grow in the arena where companies like Paytm and MobiKwik are leading swiftly.
All this indeed gave the reason to Flipkart to acquire the new mobile payments startup. This would, however, not give a major boost to its online marketplace.