E-commerce giant Flipkart has acquired Bangalore-based mobile payments company PhonePe, its third acquisition in the payments solution space.
PhonePe Internet Pvt Ltd, founded by former Flipkart employees Sameer Nigam and Rahul Chari last year, is building a payments solution based on the Unified Payments Interface (UPI), an initiative of the National Payments Corporation of India.
"The acquisition of PhonePe is in-line with Flipkart's focus on driving innovation on the payments front," said Binny Bansal, CEO of Flipkart. "Payments has been one of the biggest hurdles for mass adoption of online shopping in India. UPI has the potential of transforming the entire payments ecosystem in the country."
The absence of a mobile payments app to ensure seamless digital transactions has been long felt at Flipkart. That had forced the e-commerce company to scout for suitable acquisitions in the payments solutions space, and the PhonePe deal is its third in this space. In September 2014, it had picked up majority stake in Chandigarh-based FX Mart. A payment services startup that deals in electronic payments, remittance, foreign exchange and travel related businesses, FX Mart is the force behind Flipkart Money, the mobile wallet which it started pilot testing last month.
In 2014, Flipkart had picked up stake in payments start-up NGPay, run by Jigrahak Mobility Solutions Pvt. Ltd.
PhonePe will function as an independent business unit, according to a statement from Flipkart. Queries sent to Flipkart on the terms of the deal did not elicit any response till the time of filing this report. An earlier Mint report had said that the deal value would be between $10 million and $20 million.
PhonePe's yet-to launch UPI product will allow users to transact using their unique identification number and mobile phone number or virtual payments address without sharing any other bank details.
Nigam and Chari had earlier founded Mallers Inc (Mime360), a B2B platform targeted at the music industry. Mime360 was acquired by Flipkart in 2011. The duo were senior tech leaders in Flipkart before they quit the company last year.
In September 2014, Flipkart had said it was shutting down its one-year-old payment gateway service PayZippy. Launched in July 2013, PayZippy enabled card payments for merchant websites and mobile sites, while its B2C version allowed customers to store their card details and make payments on partner merchant sites.
Flipkart's rivals Snapdeal and Paytm both have their own mobile payments solution. Snapdeal-controlled Freecharge, which claims to have around 30 million registered users, had recently launched a virtual card named Freecharge Go that can be used to make payments across websites in India. Furthermore, Snapdeal has integrated FreeCharge's mobile recharging, utility bill and DTH payments into its Android and iOS apps. Paytm was one of the 11 applicants which received RBI's in-principle nod to get a payments bank licence last year.