How PhonePe Became India’s Leading Fintech Startup with 46% UPI Market Share?

PhonePe is a digital payments app that allows users to send and receive money, pay bills, buy gold, shop online, and more. It is one of the first apps to use the Unified Payments Interface (UPI), a system that enables instant and secure transactions across different banks. PhonePe has grown rapidly since its launch in 2015, becoming the market leader in UPI transactions with a 46% share in October 2021. In this article, we will explore the story of PhonePe, its founders, product range, valuation, growth, funding, investors, influencers, and more. We will also explain how PhonePe works and what makes it different from other payment apps.

What is PhonePe?

PhonePe supports over 11 languages and offers a wide range of services, such as:

Money Transfer: Users can send and receive money from their contacts or bank accounts using UPI or QR codes. They can also request money from others or split bills with friends.
Recharge & Pay Bills: Users can recharge their mobiles, DTH, data cards, or pay their electricity, gas, water, landline, broadband, or postpaid bills using UPI or debit/credit cards.
Buy Gold: Users can buy 24K gold at live market prices and store it in a secure locker. They can also sell it back at any time or get it delivered to their doorstep.
Shop Online: Users can shop from over 300 online platforms such as Flipkart, Myntra, Ola, Swiggy, Zomato, etc. using UPI or debit/credit cards. They can also avail cashback and offers on their purchases.
Invest & Save: Users can invest in mutual funds, stocks, insurance, or tax-saving products using UPI or debit/credit cards. They can also open a savings account with partner banks and earn interest on their balance.
Donate: Users can donate to various causes such as education, health, environment, etc. using UPI or debit/credit cards. They can also get tax benefits for their donations.

PhonePe is widely recognized and approved by Indian merchants, enabling users to pay at over 25 million offline and online stores. Users can also scan any UPI QR code to make payments.

PhonePe is available for both Android and iOS devices and can be downloaded from the Google Play Store or the App Store.

Who are the founders of PhonePe?

PhonePe was founded by three former Flipkart executives: Sameer Nigam, Burzin Engineer, and Rahul Chari. They are also the co-founders of another startup called FX Mart, which was acquired by Flipkart in 2015.

Sameer Nigam: He is the CEO and co-founder of PhonePe. He is responsible for the overall vision, strategy, and execution of the company. He has over 20 years of experience in the technology industry, working with companies like Flipkart, McKinsey, IBM, and i2 Technologies. He holds a bachelor’s degree in computer science from BITS Pilani and a master’s degree in computer science from the University of Texas at Austin.
Burzin Engineer: He is the CTO and co-founder of PhonePe. He is responsible for the technology architecture, engineering, and innovation of the company. He has over 18 years of experience in the technology industry, working with companies like Flipkart, Reliance Jio, Cleartrip, and Siemens. He holds a bachelor’s degree in computer engineering from Mumbai University and a master’s degree in computer science from the University of Southern California.
Rahul Chari: He is the CIO and co-founder of PhonePe. He is responsible for the product design, development, and management of the company. He has over 17 years of experience in the technology industry, working with companies like Flipkart, Network18, OnMobile, and Siemens. He holds a bachelor’s degree in electronics engineering from Mumbai University and a master’s degree in computer science from IIT Bombay.

How did PhonePe start?

PhonePe was born out of the frustration of its founders with the existing payment systems in India. They wanted to create a simple, fast, and secure way to transfer money between people and businesses.

They were inspired by the launch of UPI in 2016, which was a game-changer for the digital payments industry. UPI allowed users to link their bank accounts to their mobile numbers and create virtual payment addresses (VPAs) to send and receive money instantly.

The founders decided to leverage UPI to build a payment app that would offer a seamless user experience and a variety of services. They named it PhonePe, which means “on the phone” in Hindi.

They launched PhonePe in August 2016 as a subsidiary of Flipkart, which had acquired their previous startup FX Mart. They partnered with Yes Bank as their banking partner to enable UPI transactions on their app.

PhonePe was one of the first apps to use UPI and quickly gained popularity among users and merchants. It also added more features and services to its app over time, such as recharges, bill payments, gold buying, online shopping, etc.

In December 2018, PhonePe became an independent entity after Walmart acquired Flipkart. It also raised $700 million from Walmart and other investors at a valuation of $5.5 billion.

Since then, PhonePe has continued to grow and innovate in the digital payments space, becoming one of the leading fintech startups in India.

What is the mission and vision of PhonePe?

The mission of PhonePe is to make digital payments accessible, affordable, convenient, and secure for everyone in India.

The vision of PhonePe is to become a one-stop solution for all the financial needs of its users and merchants.

What is the meaning of PhonePe’s name, tagline, and logo?

The name PhonePe means “on the phone” in Hindi. It reflects the idea that users can do everything related to payments on their phones using the app.

The tagline of PhonePe is “Payments Made Easy”. It conveys the message that PhonePe simplifies the payment process for its users and merchants.

The logo of PhonePe is a stylized representation of a phone with a smiley face on it. It symbolizes the happiness and satisfaction that PhonePe brings to its customers.

What is the business model of PhonePe?

The business model of PhonePe is based on three pillars: customer acquisition, customer retention, and customer monetization.

Customer Acquisition: PhonePe acquires customers through various channels such as word-of-mouth referrals, social media campaigns, offline marketing activities, partnerships with online platforms and offline merchants, etc. It also offers incentives such as cashback, discounts, rewards, etc. to attract new users.
Customer Retention: PhonePe retains customers by providing them with a seamless user experience and a wide range of services on its app. It also engages them with personalized offers, notifications, gamification features, etc. It also ensures that its app is secure, reliable, and compliant with all regulations.
Customer Monetization: PhonePe monetizes customers by earning commissions from its partner banks, online platforms, and offline merchants for facilitating transactions on its app. It also earns interest from the funds stored in its wallet or savings account. It also generates revenue from selling financial products such as mutual funds, insurance, etc. to its users.

How does PhonePe make money?

PhonePe makes money from the following sources:

Transaction Fees: PhonePe charges a fee to its partner banks, online platforms, and offline merchants for processing transactions on its app. The fee varies depending on the type, size, and frequency of the transactions. For example, PhonePe charges 0.65% to 1% of the transaction value for UPI transactions, 1.5% to 2% for debit/credit card transactions, and 2% to 3% for wallet transactions.
Interest Income: PhonePe earns interest from the funds stored in its wallet or savings account by its users. The interest rate ranges from 3% to 6% per annum depending on the balance and tenure of the funds.
Financial Services: PhonePe sells financial products such as mutual funds, stocks, insurance, etc. to its users and earns commissions from the product providers. The commission rate varies depending on the product category, type, and amount. For example, PhonePe charges 0.5% to 1.5% of the investment value for mutual funds, 0.01% to 0.05% of the trade value for stocks, and 10% to 20% of the premium value for insurance.
Advertising: PhonePe displays ads from various advertisers on its app and earns revenue from them based on the impressions, clicks, or conversions generated by the ads. The ad rate depends on the ad format, size, placement, and target audience.

How much is PhonePe worth?

PhonePe is valued at $12 billion as of December 2021, according to media reports. It raised $700 million in a funding round led by Walmart in December 2020 at a valuation of $5.5 billion. It is also reportedly in talks to raise another $1 billion in a funding round that could value it at $15 billion.

How many users does PhonePe have?

PhonePe has over 350 million registered users and over 250 million active users as of December 2021, according to its website. It also claims to have over 25 million merchant partners across India.

PhonePe is the market leader in UPI transactions with a 46% share in October 2021, according to NPCI data. It processed over 1.3 billion UPI transactions worth over Rs 2.9 lakh crore in October 2021.

PhonePe is also among the top three payment apps in India along with Google Pay and Paytm, according to various reports and surveys.

What are the challenges faced by PhonePe?

PhonePe faces several challenges in its journey to become a dominant player in the digital payments space in India. Some of them are:

Competition: PhonePe competes with several players in the digital payments space such as Google Pay, Paytm, Amazon Pay, WhatsApp Pay, etc. These players have their own strengths and advantages such as brand recognition, user base, features, etc. that pose a threat to PhonePe’s market share and growth.
Regulation: PhonePe has to comply with various regulations and guidelines issued by the government and regulatory bodies such as RBI, NPCI, SEBI, IRDAI, etc. These regulations may change from time to time and affect PhonePe’s operations and profitability. For example, RBI has imposed a cap of 30% on the market share of UPI transactions for each payment app from January 2023 onwards.
Security: PhonePe has to ensure that its app is secure and reliable for its users and merchants. It has to protect its app from cyberattacks, frauds, scams, etc. that may compromise its data and reputation. It also has to educate its users and merchants about the best practices and precautions to avoid any misuse or loss of their funds.
Innovation: PhonePe has to constantly innovate and improve its app to offer new and better services to its users and merchants. It has to keep up with the changing needs and preferences of its customers and the evolving trends and technologies in the digital payments space.

How much funding has PhonePe raised?

PhonePe has raised a total of $1 billion in funding so far from various investors such as Walmart, Flipkart, Tencent Holdings Ltd., Tiger Global Management LLC., etc.

The breakdown of PhonePe’s funding rounds is as follows:

Seed Round: In December 2015, PhonePe raised an undisclosed amount of seed funding from Flipkart as part of its acquisition deal.
Series A Round: In April 2016, PhonePe raised $5 million in Series A funding from Flipkart as part of its strategic partnership deal.
Series B Round: In October 2017, PhonePe raised $38.7 million in Series B funding from Flipkart as part of its capital infusion deal.
Series C Round: In March 2018, PhonePe raised $175.3 million in Series C funding from Tencent Holdings Ltd. and Tiger Global Management LLC. at a valuation of $1.5 billion.
Series D Round: In December 2020, PhonePe raised $700 million in Series D funding from Walmart and other existing investors at a valuation of $5.5 billion.

Who are the investors in PhonePe?

PhonePe has received investments from the following investors:

Walmart: Walmart is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores. It is the world’s largest company by revenue and the largest private employer in the world. It acquired a 77% stake in Flipkart in 2018 for $16 billion and became the majority owner of PhonePe. It also led PhonePe’s Series D funding round in 2020 with a $300 million investment.
Flipkart: Flipkart is an Indian e-commerce company that offers online shopping for various products such as electronics, fashion, home appliances, books, etc. It is one of the largest online retailers in India and a subsidiary of Walmart. It acquired PhonePe in 2015 and invested in its seed, Series A, and Series B funding rounds. It also participated in PhonePe’s Series D funding round in 2020 with a $200 million investment.
Tencent Holdings Ltd.: Tencent Holdings Ltd. is a Chinese multinational technology conglomerate that offers various internet-related services and products such as social media, gaming, e-commerce, cloud computing, etc. It is one of the largest internet companies in the world and the owner of popular platforms such as WeChat, QQ, Tencent Music, etc. It invested in PhonePe’s Series C funding round in 2018 with a $150 million investment.
Tiger Global Management LLC.: Tiger Global Management LLC. is an American investment firm that focuses on private equity, venture capital, and public equity markets. It invests in various sectors such as technology, consumer, media, telecom, etc. It is one of the most active investors in Indian startups and has backed companies such as Ola, Zomato, Byju’s, etc. It invested in PhonePe’s Series C funding round in 2018 with a $25.3 million investment.

Has PhonePe acquired any other companies?

PhonePe has acquired two other companies so far:

FX Mart: FX Mart was a fintech startup that provided online foreign exchange services such as money transfer, currency exchange, prepaid cards, etc. It was founded by Amit Narang in 2013 and had a license from RBI to operate as a full-fledged money changer (FFMC). It was acquired by Flipkart in 2015 for Rs 45.4 crore and became the basis for PhonePe’s UPI platform.
Zopper Retail: Zopper Retail was a hyperlocal retail platform that connected offline retailers with online customers. It was founded by Neeraj Jain and Surjendu Kuila in 2010 and had over 15,000 merchants across India. It was acquired by PhonePe in 2018 for an undisclosed amount and became part of PhonePe’s merchant network.

Does PhonePe offer ESOPs to its employees?

Yes, PhonePe offers employee stock ownership plans (ESOPs) to its employees as part of its compensation package. ESOPs are a type of equity incentive that gives employees the right to buy shares of the company at a discounted price after a certain period of time.

PhonePe has allocated about 10% of its equity to its ESOP pool and has granted ESOPs to over 2,000 employees so far. It also allows its employees to sell their ESOPs to its investors during its funding rounds.

In December 2020, PhonePe announced that it would give an additional Rs 200 crore worth of ESOPs to its employees as a reward for their performance and contribution to the company’s growth.

Who are the partners of PhonePe?

PhonePe has partnered with various entities across different sectors to offer its services to its users and merchants. Some of its key partners are:

Banks: PhonePe has partnered with over 140 banks to enable UPI transactions on its app. Some of its banking partners are Yes Bank, ICICI Bank, HDFC Bank, Axis Bank, State Bank of India, etc.
Online Platforms: PhonePe has partnered with over 300 online platforms to enable online shopping on its app. Some of its online platform partners are Flipkart, Myntra, Ola, Swiggy, Zomato.
Offline Merchants: PhonePe has partnered with over 25 million offline merchants to enable offline payments on its app. Some of its offline merchant partners are Reliance Fresh, Spencer’s, Apollo Pharmacy, KFC, McDonald’s, etc.
Financial Institutions: PhonePe has partnered with various financial institutions to offer financial products on its app. Some of its financial institution partners are Bajaj Finserv, ICICI Prudential, Aditya Birla Sun Life, Axis Direct, etc.
Charitable Organizations: PhonePe has partnered with various charitable organizations to enable donations on its app. Some of its charitable organization partners are GiveIndia, CRY, Akshaya Patra, WWF India, etc.

How does PhonePe advertise and promote itself?

PhonePe advertises and promotes itself through various channels such as:

Social Media: PhonePe uses social media platforms such as Facebook, Twitter, Instagram, YouTube, etc. to create awareness and engagement among its target audience. It posts regular updates, offers, contests, videos, etc. on its social media pages and encourages users to share their feedback and experiences with the app.
Offline Marketing: PhonePe uses offline marketing activities such as billboards, hoardings, banners, posters, flyers, etc. to reach out to potential customers and merchants in different locations. It also sponsors or participates in various events such as sports tournaments, music festivals, cultural programs, etc. to showcase its brand and services.
Influencer Marketing: PhonePe uses influencer marketing to leverage the popularity and credibility of celebrities, bloggers, vloggers, etc. to endorse its app and services. It collaborates with influencers from different fields such as sports, entertainment, lifestyle, etc. to create content and campaigns that appeal to their followers and fans.
Referral Program: PhonePe uses a referral program to incentivize its existing users to invite their friends and family to use the app. It offers cashback or rewards to both the referrer and the referee for every successful referral.

What are the awards and achievements of PhonePe?

PhonePe has received several awards and recognition for its excellence and innovation in the digital payments space. Some of them are:

ET Startup Awards 2021: PhonePe won the Startup of the Year award at the ET Startup Awards 2021 organized by The Economic Times. The award recognizes the startup that has shown exceptional growth, resilience, and impact in the Indian startup ecosystem.
India FinTech Awards 2020: PhonePe won the FinTech Startup of the Year award at the India FinTech Awards 2020 organized by India FinTech Forum. The award recognizes the startup that has demonstrated outstanding innovation and growth in the fintech sector.
IAMAI India Digital Awards 2020: PhonePe won the Best Mobile Payment Product or Service award at the IAMAI India Digital Awards 2020 organized by Internet and Mobile Association of India (IAMAI). The award recognizes the product or service that has provided a superior mobile payment solution for consumers or businesses.
Forbes India Leadership Awards 2019: PhonePe won the Entrepreneur with Social Impact award at the Forbes India Leadership Awards 2019 organized by Forbes India. The award recognizes the entrepreneur who has created a positive social impact through their business venture.
ET Brand Equity Kaleido Awards 2019: PhonePe won the Best Integrated Media Campaign – Services award at the ET Brand Equity Kaleido Awards 2019 organized by The Economic Times. The award recognizes the campaign that has used multiple media platforms effectively to communicate a brand message or proposition.

Who are the competitors of PhonePe?

PhonePe faces competition from various players in the digital payments space in India. Some of its major competitors are:

Google Pay: Google Pay is a digital payments app that allows users to send and receive money, pay bills, buy tickets, shop online, etc. using UPI or debit/credit cards. It is one of the leading payment apps in India along with PhonePe and Paytm. It also offers features such as rewards, scratch cards, cashback, etc. to its users.
Paytm: Paytm is a digital payments app that allows users to send and receive money, pay bills, buy gold, shop online, etc. using UPI, wallet, debit/credit cards, or net banking. It is one of the leading payment apps in India along with PhonePe and Google Pay. It also offers features such as cashback, coupons, offers, etc. to its users.
Amazon Pay: Amazon Pay is a digital payments app that allows users to send and receive money, pay bills, buy gift cards, shop online, etc. using UPI or debit/credit cards. It is a subsidiary of Amazon, the global e-commerce giant. It also offers features such as rewards, cashback, discounts, etc. to its users.
WhatsApp Pay: WhatsApp Pay is a digital payments feature that allows users to send and receive money within the WhatsApp app using UPI. It is a part of WhatsApp, the popular messaging app owned by Facebook. It also offers features such as end-to-end encryption, instant notifications, etc. to its users.

What are the future plans of PhonePe?

PhonePe has ambitious plans to expand and diversify its business in the future. Some of its future plans are:

International Expansion: PhonePe plans to enter the international markets such as Southeast Asia, Latin America, Africa, etc. where there is a high demand and potential for digital payments. It aims to leverage its experience and expertise in India to offer its services to the global customers and merchants.
New Products and Services: PhonePe plans to launch new products and services on its app to cater to the evolving needs and preferences of its users and merchants. It aims to offer a comprehensive suite of financial solutions such as loans, credit cards, savings accounts, etc. on its app.
Offline Presence: PhonePe plans to increase its offline presence by partnering with more offline merchants across India. It aims to enable offline payments for various categories such as grocery, fuel, travel, etc. on its app.
Brand Awareness: PhonePe plans to enhance its brand awareness and recall among its target audience by investing more in marketing and advertising activities. It aims to create a strong and distinctive brand identity and positioning in the digital payments space.

Summary

PhonePe was founded by three former Flipkart executives: Sameer Nigam, Burzin Engineer, and Rahul Chari in 2015. It was acquired by Flipkart in 2015 and became an independent entity after Walmart acquired Flipkart in 2018.

PhonePe has grown rapidly since its launch, becoming the market leader in UPI transactions with a 46% share in October 2021. It has over 350 million registered users and over 250 million active users as of December 2021.

PhonePe makes money from transaction fees, interest income, financial services, and advertising. It is valued at $12 billion as of December 2021 and has raised $1 billion in funding so far from various investors such as Walmart, Flipkart, Tencent Holdings Ltd., Tiger Global Management LLC., etc.

PhonePe faces competition from various players in the digital payments space such as Google Pay, Paytm, Amazon Pay, WhatsApp Pay, etc. It also faces challenges such as regulation, security, innovation, etc.

PhonePe has ambitious plans to expand and diversify its business in the future. It plans to enter the international markets, launch new products and services increase its offline presence, and enhance its brand awareness.

Call to Action

If you are looking for a simple, fast, and secure way to make digital payments, then PhonePe is the app for you. You can download PhonePe from the Google Play Store or the App Store and start using it today.

You can also invite your friends and family to use PhonePe and earn cashback or rewards for every successful referral. You can also enjoy various offers and discounts on your online and offline purchases using PhonePe.

So, what are you waiting for? Join PhonePe and experience the convenience and benefits of digital payments.

FAQs

Here are some frequently asked questions about PhonePe:

Q: How can I register on PhonePe?

A: You can register on PhonePe by following these steps:

Download and install PhonePe from the Google Play Store or the App Store.
Open the app and select your preferred language.
Enter your mobile number that is linked to your bank account and verify it with an OTP.
Create a four-digit password or use your fingerprint to secure your app.
Select your bank from the list of available banks and link it with your UPI ID.
Set a UPI PIN for your bank account by entering your debit card details.
You are now ready to use PhonePe.

Q: How can I send money on PhonePe?

A: You can send money on PhonePe by following these steps:

Open the app and tap on the “To Contact” or “To Account” option on the home screen.
Select the contact or enter the account details of the person you want to send money to.
Enter the amount you want to send and add a remark if you want.
Choose the payment mode such as UPI, wallet, debit/credit card, etc. and confirm it with your UPI PIN or CVV/OTP.
You will receive a confirmation message once the money is sent.

Q: How can I receive money on PhonePe?

A: You can receive money on PhonePe by following these steps:

Open the app and tap on the “Request” option on the home screen.
Select the contact or enter the account details of the person you want to request money from.
Enter the amount you want to request and add a remark if you want.
Tap on “Request” and wait for the person to accept your request and send you money.
You will receive a notification once the money is received.

Q: How can I pay bills on PhonePe?

A: You can pay bills on PhonePe by following these steps:

Open the app and tap on the “Recharge & Pay Bills” option on the home screen.
Select the category of bill you want to pay such as electricity, gas, water, etc.
Select the provider of bill you want to pay such as BSES, Mahanagar Gas, Delhi Jal Board, etc.
Enter the details of bill such as consumer number, bill number, etc. and fetch your bill amount.
Choose the payment mode such as UPI, wallet, debit/credit card, etc. and confirm it with your UPI PIN or CVV/OTP.
You will receive a confirmation message once the bill is paid.

Q: How can I shop online on PhonePe?

A: You can shop online on PhonePe by following these steps:

Open the app and tap on the “Switch” option on the home screen.
Select the online platform you want to shop from such as Flipkart, Myntra, Ola, Swiggy, Zomato, etc.
Browse through the products or services you want to buy and add them to your cart.
Proceed to checkout and choose PhonePe as your payment option.
Choose the payment mode such as UPI, wallet, debit/credit card, etc. and confirm it with your UPI PIN or CVV/OTP.
You will receive a confirmation message once your order is placed.

References

Here are some of the sources we used to write this article:

PhonePe – Official Website
PhonePe Success Story: India’s Leading Payments App – StartupTalky
UPI In 2021: PhonePe, Google Pay Lead Market Share – Inc42 Media
[The Turning Point] How a failed startup led these former Flipkart colleagues to launch fintech unicorn PhonePe – YourStory](https://yourstory.com/2022/04/the-turning-point-fintech-startup-phonepe)
PhonePe’s UPI market share rises to 46% in Oct; WhatsApp Pay’s struggle continues – Entrackr

You need to read this!

If you are into the Startup Ecosystem of India, Here are the best 5 Masterpiece Case Studies of India’s Leading Startups

Subscribe to our newsletter by submitting an email in the sidebar to grab more such stuff every week. Do not worry we will not spam your mailbox and follow us on Twitter, LinkedIn, Instagram, and Pinterest.