Tag: phonepe

PhonePe reports 85% jump in revenue at ₹690 cr in FY21

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Digital payments company PhonePe has reported a revenue of ₹690 crore in FY 21, which is about an 85.5 per cent jump from ₹372 crore revenue reported in FY20, according to the company’s recent regulatory filings.

Majority of the company’s revenue has come from payments and allied services. PhonePe claims to have a 45 per cent market share in digital payments, and a 300 million user base.

Further, the company’s net loss during the period stood at ₹1,727 crore as compared to ₹1,771 crore in FY20. A major part of the company’s cost this year was on employee benefits.

Excluding the ESOPs allocated by the company in FY21, PhonePe’s costs during this period stood at ₹884.4 crore, which is about 44 per cent less than costs incurred last year.

Reduced expenses

The company reduced various costs during this period, including the marketing and promotional expenses which stood at ₹535 crore in FY 21, as compared to ₹1,016 crore in FY 20, about 47 per cent drop in these costs. Further, costs like payment processing fee and customer support also were brought down by 28 per cent and about 34 percent respectively.

PhonePe is digital payments platform with over 300 million registered users. Using PhonePe, users can send and receive money, recharge mobile, DTH, data cards, pay at stores, make utility payments, buy gold and make investments.

PhonePe forayed into financial services in 2017 with the launch of gold category, providing users with an option to buy 24-karat gold securely on its platform. PhonePe has since launched several mutual funds and insurance products like tax-saving funds, liquid funds, international travel insurance, life insurance, and insurance for the Covid-19 pandemic among others. PhonePe is also accepted at 20+ million merchant outlets across India.

Also read: PhonePe and NBBL partner to launch ClickPay

The most frequent use-cases on the PhonePe app are said to be digital money transfers, bill payments or recharge, and offline transactions at stores through PhonePe. In an earlier conversation with BusinessLine, PhonePe co-founder and CTO Rahul Chari said going forward, PhonePe will be focusing more on the financial services space and collaborating more with the BFSI sector across insurance, investments, and lending. In the past few months, PhonePe has got its insurance broking license and an in-principle approval to operate as an account aggregator.

It had also launched ClickPay for its customers in association with NPCI Bharat BillPay Ltd.(NBBL), which is a payment link that enables customers to make recurring online bill payments(electricity, water, gas, loan, etc) and removes the need to remember tedious account details associated with each biller/service.

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PhonePe and NBBL partner to launch ClickPay

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Digital payment platform PhonePe has, in association with NPCI Bharat BillPay Ltd (NBBL), launched ClickPay for its customers.

ClickPay is a unique payment link that enables customers to make recurring online bill payments (electricity, water, gas, loan, etc) and removes the need to remember tedious account details associated with each biller or service. This link sent by the biller will lead the customer directly to the payment page, fetching the bill amount instantly.

Streamline payment process

ClickPay benefits PhonePe customers by removing the hassle of remembering the unique identifiers and details associated with making bill payments — they can simply pay by clicking on the ClickPay link sent by their biller, making it a two-step process. This launch will help increase the share of digital transactions in the ecosystem by reducing errors induced by manual inputs required for bill payments.

Ankit Gaur, Director, Online Merchants at PhonePe, said, “This partnership will bring a large number of potential customers from the offline realm to pay their bills online. We believe that this will further the adoption of digital payments by making the discovery of billers and bill payments convenient for consumers.”

Also see: Still a long way to become a Super App: PhonePe co-founder

Rahul Tandon, Head Product & Market Development, NPCI Bharat BillPay, said, “ClickPay is a step to empower the customer, wherein with ease, payment can be effected sans the tedium of manual inputs and errors. ClickPay facility with PhonePe will extend robust facilitation to a huge customer base. ClickPay will assure faster payments and help with furthering digital transactions in the payments service space.”

PhonePe is a digital payments platform with over 300 million registered users. Using PhonePe, users can send and receive money, recharge mobile, DTH, data cards, pay at stores, make utility payments, buy gold and make investments. PhonePe forayed into financial services in 2017 with the launch of Gold, providing users with an option to buy 24-karat gold securely on its platform. PhonePe has since launched several mutual funds and insurance products like tax-saving funds, liquid funds, international travel insurance, life insurance, and insurance for the Covid-19 pandemic among others. PhonePe is also accepted at 20+ million merchant outlets across India.

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Still a long way to become a Super App: PhonePe co-founder

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As the race to become a super app heats up in the India, PhonePe co-founder and CTO Rahul Chari said that the company still has a long way ahead in building such as platform.

Given the multiple offerings and partnerships, PhonePe is often counted as a potential super app for Indian consumers. Super app is defined as an app that has at least two high frequency use-cases or functions.

“I think send (sending money) and spend (merchant transactions) is where we believe that we have made our mark, and we still have a long way to go when it comes to financial services, so we are still a way off,” Chari told BusinessLine.

Build trust

Adding to that, Karthik Raghupathy, Head of Strategy and Investor Relations at PhonePe, noted that the company is feeling good about their journey as consumers are trusting them with send and spend related services.

“We need to build trust to enter financial services. Banks have historically had that trust because people have placed their earnings with them. We are gaining that trust on the back of payments. Now as we move into the financial services space, we are seeing good proof points that we can get there but like Rahul (Chari) said, there’s still a long journey ahead of us,” he said.

Consolidated service

PhonePe has expanded into a majority of verticals encompassing all things money. Users can today send and receive money, recharge mobile, DTH, data cards, pay at stores, make utility payments, buy gold, insurance and make investments. PhonePe also launched its Switch platform in 2018, enabling users to place orders on 600 apps directly from within the PhonePe mobile app. PhonePe claims to be accessible at 20 million merchant outlets across 12,000 towns and 4,000 taluks nationally.

The most frequent use-cases on the app are digital money transfers, bill payments or recharge, and offline transactions at stores. The executives claim that once a new user has done two or more of these three use-cases, they tend to stay with PhonePe and repeat transactions happen in almost 100 per cent cases.

Also see: Proposed e-commerce rules could dampen super app plans of many Indian players

Chari added that PhonePe is focused on building a service where everything about money is easily available to the users on a single platform that they trust and engage with. And the experiences around daily and high frequency use cases are about transactions that are completed in the fastest possible manner.

PhonePe recently got its insurance broking license and an in-principle approval to operate as an account aggregator. Going forward, PhonePe will be focusing more on the financial services space and collaborating more with the BFSI sector across insurance, investments, and lending.

While the company did not comment on the profitability and IPO timelines. Chari noted that the company is quite efficient in growing its user base and has stopped doing cash backs to inspire repeat customer behaviours.

Interactive website

Further, PhonePe has launched an interactive website showing data, insights, and trends on digital payments done through its app — called PhonePe Pulse. PhonePe claims to have a 45 per cent market share in digital payments, and a 300 million user base.

The company sees this as a way to give back to the ecosystem and hopes that government, policy makers, regulatory bodies, media, industry analysts, merchant partners, start-ups, academic institutions and students will benefit with this data.

“It’s not all necessarily just noble and altruistic. If any of these collaborations happen, I’m sure there will be people who would want to strike a partnership with PhonePe. There will be new companies that emerge, they can actually then collaborate much more deeply with us, so we will actually benefit both as a business and a product, along with the larger goal of saying we are enabling multiple businesses,” said Chari.

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PhonePe receives insurance broking licence

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PhonePe has received an insurance broking licence from the Insurance Regulatory and Development Authority of India (IRDAI). Last year, PhonePe entered the insurtech sector with a limited ‘corporate agent’ licence, which allowed the company to partner with only three insurance companies per category. With the new ‘direct broking’ licence, PhonePe can distribute insurance products from all insurance companies in India.

It also allows PhonePe to offer personalised product recommendations to its 300-million user base, and a bigger portfolio of insurance products for Indian consumers.

Digital transactions grew 80% in last 250 days: Razorpay report

PhonePe forayed into the insurance segment in January 2020 as a ‘corporate agent’ and has since launched offerings in general insurance, term insurance and health insurance.

On the direct broking licence, PhonePe’s Vice-President and Head of Insurance Gunjan Ghai said, “This licence is a big milestone in our insurance journey. We are building a full-service platform through innovative products in partnership with insurers. This move will lead us closer to our goal of becoming a one-stop destination for insurance needs.”

Government notifies law to shed holding in public sector general insurance company

PhonePe is a digital payments platform where users can send and receive money, recharge mobiles, DTH, data cards, pay at stores, make utility payments, buy gold, and make investments. PhonePe forayed into financial services in 2017 with its product Gold, which allows users to buy 24-karat gold securely on its platform.

PhonePe has since launched several mutual funds and insurance products like tax-saving funds, liquid funds, international travel insurance and Corona Care, a Covid-focused insurance product, among others. PhonePe also launched its Switch platform in 2018; customers can place orders on over 600 apps including Ola, Swiggy, Myntra, IRCTC, Goibibo, RedBus and so on, from the PhonePe app. PhonePe is accepted at 20-plus million merchant outlets across India.

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PhonePe to use $50 million Tencent funding for overseas acquisition

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PhonePe plans to use the $50 million funding received from Chinese conglomerate Tencent for its overseas acquisition and to support its Singapore office operations, according to a source close to the development. While all PhonePe employees are based in India, the company has a small team in Singapore looking after legal and M&A proceedings, the source added.

Tencent has acquired a minority (1.8 per cent) stake in PhonePe as part of the company’s $700 million funding round which was announced in December 2020. PhonePe has been in talks to acquire content and app discovery platform Indus OS (registered name – OSLabs) for $60 million since May 2021. However, the deal could not be completed because of the objection raised by existing investors, Affle Global and Ventureast. The existing investors value Indus OS at $90 million, while PhonePe had offered to acquire about 90 per cent stake in the company for $60 million. Since then the deal has been in a legal tussle.

“The case is expected to be closed in a few months. Companies had a court hearing a few months back and they both also participated in an extraordinary general meeting (EGM) in July, which was mandated by the Singapore High Court,” the source told BusinessLine. In July 2021, Affle Global claimed to have gotten a favourable ruling from Singapore HC. However, PhonePe refuted the claim at that time and said that no final ruling has come out yet.

“In addition to IndusOS, PhonePe had also acquired MapMyIndia in the past. This acquisition is being used to power the PhonePe store feature which helps users discover nearby stores. It is similar to Google Maps but it is built for the local audience,” the source added.

Synergies

Indus OS has built Indus App Bazaar which has a portfolio of 4 lakh localised Indian apps, making it an Indian alternative to platforms like Google PlayStore and AppStore. PhonePe is looking to integrate the Indus App Bazaar in PhonePe Switch, which hosts m-sites (mobile sites) for a variety of apps like Myntra, Zivame, Grofers, Netmeds etc.

The Indus OS acquisition can potentially strengthen the super app ambitions of PhonePe. Currently, PhonePe has expanded into a majority of verticals encompassing all things money. It allows users to send and receive money, recharge mobile, DTH, data cards, pay at stores, make utility payments, buy gold and make investments. PhonePe forayed into financial services in 2017 with the launch of Gold, which enabled users to buy 24-karat gold on its platform.

Since then, the company has launched several mutual funds and insurance products like tax-saving funds, liquid funds, international travel insurance, and Corona Care, a dedicated insurance product for the Covid-19 pandemic among others. PhonePe also launched its Switch platform in 2018, enabling users to place orders on 600 apps directly from within the PhonePe mobile app. PhonePe claims to be accessible at 20 million merchant outlets across 12,000 towns and 4,000 talukas nationally.

PhonePe is also the market leader in terms of UPI transactions. The NPCI data for the month of July 2021 showed that the company holds about 46% per cent of the market share by transaction volume. Media reports have claimed that PhonePe’s Indian competitor Paytm is also planning to launch its super app by the end of this year.

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From Amazon to Zomato, a big crowd at RBI doors for payment aggregator licence, BFSI News, ET BFSI

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Mumbai: A slew of companies harbouring fintech ambitions have made a beeline to the Reserve Bank of India to become licensed Payment Aggregators (PAs) under the central bank’s upcoming regulatory regime for non-bank payment providers.

Firms that have applied for authorisation or in advanced stages of submitting their proposals to the RBI include the Tata group, Amazon, Reliance Industries, Dutch payments startup Adyen, Paytm, BharatPe, PhonePe, CC Avenue, Razorpay, Cred, Zomato, PayU, Worldline, Pine Labs and CAMSPAY, sources involved in the diligence process told ET.

At least 30 firms are learnt to have submitted their proposals, sources said, indicating that the number of applicants could increase before the September 30 deadline for existing and new non-bank firms to apply.

The firms that will be authorised to operate as PAs in India will be under the direct purview of RBI in rendering payment services to merchants, in a step that many industry insiders said would lead towards a more standardised and regulated payments ecosystem.

“For long, the operations of PAs in India have been seen as a blind spot for regulations,” said a payments industry insider. “RBI’s PA/PG rules in this regard were introduced to ensure a standard for those firms offering payment service to merchants.”

“There is a feeling that any internet firm with a mass consumer base will be applying for a PA licence as the eligibility barrier is low and missing out on approval can limit any future expansion in offering fintech services,” the source said.

Under the new rules, any firm acquiring merchants would compulsorily need RBI approval to operate as a licensed PA, the source added.

The central bank’s new Payment Aggregator/Payment Gateway guidelines – introduced formally in March 2020 – mandate that only firms approved by RBI can acquire and offer payment services to merchants. Regulated banks do not need any separate approvals.

As per RBI rules, the eligibility criteria for a firm applying for PA authorisation is a minimum net worth of Rs 15 crore in the first year of application and going up to Rs 25 crore by the second year.

The firm also must fulfil ‘fit and proper’ criteria as well as be compliant with global payment security standards under PCI DSS, an information security protocol maintained by payment firms across the world.

“PhonePe has been operating as a Payment Aggregator, offering payment services to merchants on our network. In line with the RBI guidelines, we would be applying for the PA licence to continue offering payment services to our merchant partners,” a PhonePe spokesperson said.

According to Ramesh Narasimhan, Head – Digital Commerce, Worldline India, “Ingenico ePayments India – a Worldline brand, is in the process of directly applying for the Payment Aggregator license well before the deadline as we remain committed to deepening the reach of online payment solutions in India.”
Spokespersons for Adyen, Razorpay and Cred did not offer comment. Other firms cited earlier in the story did not respond to ET’s email. RBI also did not comment.

Newly listed Zomato said in exchange disclosure that it had already incorporated a wholly owned subsidiary to handle digital payments and payment gateway services.

Sources told ET that many leading e-commerce marketplaces, global payment firms, existing PGs and domestic consumer internet firms are also in line to apply for authorisations.

ET could not independently confirm these names.

“There is almost a sense that RBI is inundated with the rush of applications,” a second source aware of the matter said. “The indication has been that RBI will take a ‘First In, First Out’ approach in scrutinising different proposals. This means that the overall scrutiny process is likely to take a few months.”

“The regulator will also allow firms to continue their operations until they communicate the fate of the respective proposals. For a PA operating in India whose application has been turned down, the expectation is that RBI will offer a window to wind down its operations,” the source, who is the chief executive of one of the firms applying for authorisation, told ET.

RBI defines PAs as entities that facilitate e-commerce sites and merchants to accept various payment instruments from the customers for completion of their payment obligations, without the need for merchants to create a separate payment integration system of their own.

PGs are defined as entities that provide technology infrastructure to route and facilitate processing of an online payment transaction without any involvement in handling of funds.

The motive of the new PA/PG guidelines could also be to have a better supervisory control over payment operations of internet and e-commerce firms in India.

The applicability for PA/PG authorisation could be made ‘on-tap’ after the initial set of approvals, a third source said.



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PhonePe launches UPI-based AutoPay functionality for mutual fund SIP investments

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Homegrown digital payments platform PhonePe on Monday announced the launch of UPI based AutoPay functionality for its mutual fund investment offerings.

The functionality will allow PhonePe customers to set up their mutual fund SIPs in a few steps.

With UPI Autopay, customers can set up their SIPs in three steps – selecting the fund, input of monthly SIP investment amount, and authentication with a UPI PIN.

Also read:PhonePe and Flipkart partner to digitise cash-on-delivery payments

“It furthers PhonePe’s vision to continually enhance the end-to-end customer experience while catering to their needs in building the investment portfolio of their choice,” the company said in an official release.

The SIP through UPI AutoPay option is available for all existing and new investors on the PhonePe app.

In order to set up UPI AutoPay for Investments on PhonePe, users can click on the ‘Start a SIP’ icon in the investment section on the PhonePe app homepage.

From there, they can choose their investment style (from conservative/moderate/aggressive) and duration of investment (short/medium/long term).

Also read:PhonePe launches a new wallet auto top-up feature

Users can select a fund, enter the monthly investment amount and then enter their UPI pin to set up regular investments.

Customers can also access the UPI Autopay feature when they opt for monthly SIPs through any of the mutual fund investment options available on PhonePe, it said. The platform has over 307 million registered users.

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PhonePe and Flipkart partner to digitise cash-on-delivery payments

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Digital payments platform PhonePe has partnered with Flipkart to launch contactless ‘Scan and Pay’ feature for the e-commerce major’s pay-on-delivery orders.

“PhonePe’s dynamic QR code solution will enable customers who earlier opted for cash on delivery to pay digitally through any UPI app at the time of delivery,” it said in a statement on Tuesday, adding that this would help reduce personal contact while ensuring safety, and drive contactless payments for customers who are traditionally more comfortable with cash on delivery.

Ankit Gaur, Director of Business, PhonePe said, “Digital payments adoption has become widespread over the past few years thanks to UPI. However, there still continues to be a preference for cash on delivery among some customers at the time of delivery. Digitising these cash-based payments would give a major boost to not just e-commerce but also contribute to the larger goal of Digital India.”

Also read: Flipkart launches Shopsy to help entrepreneurs

With this facility, customers will just need to scan the PhonePe QR code to make contactless payments from home for deliveries from Flipkart.

“While the pandemic has urged several consumers to make a shift to online shopping, some trust deficit during checkout remains in pockets. With ‘pay-on-delivery’ technology, we want to ensure that customers have peace of mind with their payments and at the same time can shop within the safety of their homes,” said Ranjith Boyanapalli, Head – Fintech and Payments Group, Flipkart.

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PhonePe in talks with Indus OS founders and Samsung Ventures for majority stake

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PhonePe is in talks with the founders of Indus OS to buy out their 20 per cent stake in the startup as part of a plan to increase its shareholding to 92 per cent. PhonePe currently owns 32 per cent in Indus OS and wants to take full control. PhonePe is also in talks with Samsung Ventures to acquire a part of the 20 per cent stake it holds in Indus OS.

“As per the initial conversations, Samsung Ventures is likely to continue as a stakeholder and investor in the startup, but might be diluting its stake,” a source in the know told BusinessLine seeking anonymity.

Investor dissent

This comes even as mobile marketing company Affle Global, which owns 25 per cent stake in Indus OS’ parent firm OSLabs, has objected to the low valuation being offered by PhonePe to acquire controlling stake.

Affle recently said it has won a legal case at a Singapore court, which ordered Indus OS’ parent OSLabs to hold an extraordinary general meeting (EGM) with all the existing investors.

The source cited above mentioned that the term sheet floated by PhonePe in March 2021 valuing Indus OS at $60 million was agreed upon by all the investors including Affle Global which then held 8 per cent and venture capital firm Ventureast having 15 per cent stake. “All the investors selling their stake had shared “written resolutions as they couldn’t hold a face-to-face EGM due to lockdown,” said the source.

Affle Global, however, said that the deal was taking place at a reduced valuation and Indus OS’ valuation stood at over $90 million instead.

“Affle is hoping that at the EGM, some investors would change their minds and decide in their favour,” the source said

According to Affle’s statement on June 26, It had “achieved the SIAC emergency arbitration interim order on May 15, 2021, that restricted OSLabs, its founders and key shareholders from transferring approx. 20% equity ownership to PhonePe until the Right Of First Refusal is duly offered to the existing shareholders of OSLabs.”

Why is Indus OS lucrative?

Founded in 2015 by IIT Bombay alumni Rakesh Deshmukh, Akash Dongre and Sudhir B, Indus OS’ key offering is its vernacular app store called Indus App Bazaar, which reportedly has over 100 million users in the Tier-2 and Tier-3 towns and beyond. Its app store has more than 4,00,000 apps and AI capabilities to offer many languages beyond the 12 vernacular languages it offers today in India.

“Indus OS powers Samsung Galaxy App Store. The whole mission of trying to create an alternative app store is a big thing. PhonePe is just the company acquiring it. The real people behind them are Flipkart and Walmart,” said a second source.

“Focus of Indus OS was always on localisation for India. They are not pushing any and every app. They are trying to bring relevance to the apps that are offered on their app store, based on the user’s requirements. That’s where they primarily differentiate. This in turn also helps the developers reach the right target consumers. Today, app makers spend around ₹15-40 per installation. If that is not done with the right customer, you don’t just lose money but the entire lifetime value of recall. That’s why Samsung has been investing in the company,” Faisal Kawoosa, Founder and Chief Analyst, Techarc told BusinessLine.

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