Phone Pe – Simplified Transactions

Phone Pe- A startup which simplified payment transactions in India

Introduction:

Phone Pe is an Indian digital payments and financial services company, headquartered in Bengaluru. The Phone Pe app, based on the Unified Payments Interface (UPI), went live in August 2016. Using Phone Pe, users can send and receive money, recharge mobile, DTH, data cards, make utility payments, pay at shops, invest in tax saving funds, liquid funds, buy insurance, mutual funds, and digital gold.

Phone Pe is accepted as a payment option by over 3.5 crore offline and online merchant outlets, constituting 99% of pin codes in the country. The app served more than 10 crore users as of June 2018, processed 500 crore transactions by December 2019 and crossed 10 crore transactions a day in April 2022. It currently has over 44 crore registered users with over 20 crore monthly active users.

It is licensed by the Reserve Bank of India for the issuance and operation of a Semi Closed Prepaid Payment system.

The Genesis – Birth:

Phone Pe was founded in December 2015 by Sameer Nigam, Rahul Chari and Burzin Engineer.In April 2016, the company was acquired by Flipkart and as part of the acquisition, the FxMart license was transferred to Phone Pe and rebranded as the Phone Pe wallet. Phone Pe’s founder Sameer Nigam was appointed as the CEO of the company. Since it was founded, it has only a website which wasn’t popularised among the Indian people as they were not aware of what actually digital payments means.

The digital payment scenario has changed drastically since the demonetisation in 2016. As a result, India’s volume of digital payments has increased by 33% year-on-year (YoY) during the financial year 2021-22. 7422 Crores of digital payment transactions were recorded during this period, rising from 5,554 in 2020-21.

This led to the popularisation of the digital payments in India which also led the Phone Pe capture the Indian markets. It was considered as the actual birth of this startup as it was popularised after several years of its actual birth.

The Disruption and Innovation – Uniqueness:

Unlike other Digital payments app, Phone Pe has its unique way of providing valuable service to its users. Despite having only a website they went a step ahead and partnered with Yes Bank to create a UPI- based mobile payment app based on the government- backed UPI platform in 11 Indian languages. Within three months of launch, the app was downloaded by over one crore users.

In 2018, Phone Pe became the fastest Indian payment app to get a five crore badge on the Google Play Store. The Phone Pe app overtook BHIM to become the market leader in UPI transactions in August 2017. Phone Pe helps merchants to accept payments through all UPI-based apps, debit and credit cards, as well as wallet (Including third party wallets) on the app.

In 2022, Phone Pe became the first UPI TPAP (Third Party Application Providers) App to allow UPI activation through Aadhaar. A year later, it further expanded its services by launching international UPI payments, allowing users to pay foreign merchants with Unified Payments Interface (UPI). As per NPCI’s UPI ecosystem statistics, Phone Pe currently holds a 48% stake in the UPI market.

The Journey – Successes and Failures:

Like every other companies Phone Pe’s journey has been marked by both successes and failures too. Some of the successes are:

Growth Factor:

Phone Pe, founded in December 2015, experienced significant growth and milestones since its acquisition by Flipkart in 2016. Initially acquired at a valuation between $10 and $20 million, Phone Pe’s valuation exceeded $5.5 billion by the end of 2021, highlighting its remarkable progress.

In 2017, Phone Pe achieved the distinction of being the first UPI-based app to surpass 10 million downloads. The app consistently maintains a high ranking among finance apps on both Apple’s App Store and Google Play Store. Phone

Pe emerged as a key driver of UPI transactions in India, achieving a milestone of 1 million app transactions in a single day in 2017.

Furthermore, in 2018, Phone Pe introduced ‘micro apps’ on its platform. These micro apps provide additional functionality and services within the Phone Pe app, enhancing the user experience and expanding the range of services available to customers.

Revolution Factor:

Phone Pe has made a revolution in the Indian market. The greatest success of the Phone Pe is that it made the Payment mode simple. The app also offers various other features, including the sale of products and services such as groceries, insurance, and food. Phone Pe promotes these products and services through its app. Additionally, Phone Pe allows mobile recharge and facilitates payments for electricity and gas bills. The company has also introduced a POS machine that is widely used in shops and Kirana stores across India.

Some of the failures are:

Legal Challenges:

On 14 January 2017, ICICI bank blocked Phone Pe transactions, citing the reasons that it did not meet the NPCI guidelines. Initially, on 19 January 2017, NPCI instructed ICICI to allow UPI transactions via Phone Pe. During this period, Airtel too blocked Phone Pe transactions on its platforms. A day later, on 20 January 2017, NPCI renounced the previous instructions citing the reason that Phone Pe indeed violated the UPI norms.

After this, Phone Pe closed its operations on Flipkart’s website, to align itself with the terms stated in the updated verdict from NPCI. By February, 2017, Phone Pe resolved the issues with ICICI and Airtel.

Additional Charges:

In some cases, Phone Pe charges some extra amount for some transactions. For example, Credit card bill payments and all sort of bill payments where other UPI apps give it for no transaction cost.

The Scaling- Funding Rounds:

Phone Pe has collected $1.99 billion in funding to date over 14 rounds. The company received a fresh infusion of $297 mn from Phone Pe Private Limited Singapore, its Singapore-based company on April 15, 2022. Phone Pe concluded the last funding round worth $350 million from Walmart, which was an extension of the $700 million that was announced in December 2020.

The global Impact – Shift in the Industry Globally:

Phone Pe has created a global impact in the financial industry. It has introduced a new way of doing payments across India easily and safely. It also gave many other services like paying Credit card bill payments, water, electricity and other utility bills and also we can pay insurance and other services using a single app called Phone Pe, which was a revolution in the field of finance.

Phone Pe has influenced the finance industry globally by:

Creating a standard for safe payments: Phone Pe has created a standard for payment safety across India. It ensures the payments made through the app or website of Phone Pe is safe and secured till it the reaches the other end. It also has a support team for the customers which assist them if anything goes wrong while doing any payment transactions.

Convenience to the customers: One of the key features of the Phone Pe is that it provides extreme convenience to the customers who uses it. It acts as a one stop shop for all your bills and utility payments which reduces the stress of the people. They also created the app in a user friendly way and also offers the app in 11 different languages for the people to make their relation with Phone Pe Convenient.

Conclusion:

Phone Pe is now one of the market leader in the finance and payments industry. It has made a great revolution in the respective industry by offering a convenient method to the people to pay all their bills in a one place. It is a great example of how a startup can disrupt and innovate in a traditional industry, from breaking the rule, that people need to stand in a queue to pay their bills or send money to someone by replace it with a app where you can meet all your payment needs.

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