Bengaluru based e commerce giant Flipkart on Thursday announced that it will invest $500 million in its payment arm PhonePe. The commitment for latest capital infusion is in addition to $75 million that Flipkart has already invested in the subsidiary company.
The e commerce juggernaut said that the latest investment would be largest in the Indian fintech payments space. Interestingly, this announcement has arrived exactly a day after India’s central bank said that inter-operability of e-wallets will be relaxed in phases.
PhonePe co-founder and chief executive officer (CEO) Sameer Nigam stressed that this latest capital infusion will help the company in maintaining undeterred growth rate for the period of next two years. He further added that the fresh funds will be primarily used for scaling up PhonePe’s operations and subsequently expand merchant network & consumer base.
It is not without reason that Flipkart & Amazon are investing heavily in their payment arms, since seamless digital payment experience will play critical role in e commerce companies’ future growth. Amazon is also obsessively focused on consolidating its digital payment platform, Amazon pay.
Flipkart & Amazon’s subsidiary payment companies directly compete with established players like Mobikwik Paytm, which are widely considered as the poster boys of India’s digital payment industry. The entire Indian digital payment ecosystem is currently going through a paradigm shift, since increasing number of Indian consumers are now opting for online payment. The sporadic increase in smartphone and internet penetration have most certainly played an important role on this front.
Experts peg the value of India’s digital payment sector to be at $500 billion by 2020, which would constitute whopping 15% of India’s GDP.
