Amidst the eye-catching discounts on offer during Flipkart’s recently concluded Big Billion Days sale, a curious development went largely unnoticed. PhonePe, the payments company acquired in 2016 by Flipkart, no longer occupied pride of place on the checkout page. Instead, it was just another in a long line of payment options. PhonePe also wasn’t offering the massive cashbacks that it did on previous Big Billion Day sales.

This was a marked change for both companies. Earlier, Walmart-owned Flipkart was PhonePe’s benefactor—both in terms of capital and as a source for users. PhonePe understood this well, taking on Flipkart’s challenges as if they were its own.

The demands of the Big Billion Days sale, for example, extended to PhonePe. “Usually, during the time of the [Big Billion Days] sale, people in PhonePe aren’t allowed to take leaves and work nights just like those in Flipkart. But this time around, Big Billion Days was insignificant for PhonePe,” said an executive associated with the Flipkart Group.

But while few outside the company noticed this new normal, it was the latest and clearest sign yet that three-year-old PhonePe had outgrown its parent, Flipkart. “Three years ago, Flipkart accounted for more than 50% of transactions on PhonePe, but now it is less than 0.5% of the 350 million transactions we do in a month,” said Karthik Raghupathy, PhonePe’s head of strategy and planning.

According to sources, Walmart and Chinese conglomerate Tencent, both investors at Flipkart, are expected to invest $1 billion into PhonePe. This will be at a $9-10 billion post-money valuation, said two sources aware of the matter. This would bring it close to Flipkart, valuation-wise. In 2017, a year before Walmart bought Flipkart Group for $16 billion in the world’s largest e-commerce deal, Flipkart’s valuation was $11.6 billion. It took the Bengaluru-born e-commerce company a decade to get there. PhonePe, which was founded only in 2015, is inching closer to decacorn status—startups valued at $10 billion and over.

And as PhonePe grows into a payments behemoth—with claims of 65 million monthly active users and an annualised $100 billion worth of transactions—reports say it will be hived off into a separate unit. This could mean Walmart and Tencent, along with PhonePe co-founders Sameer Nigam and Rahul Chari, will get to own a piece of PhonePe. So far, those in PhonePe either own Flipkart stock or stock options. A PhonePe spokesperson maintained that news of funding and PhonePe being hived off as a separate entity was speculation. 

PhonePe’s burgeoning potential has been a blessing for Walmart. The company drew the ire of investors with its Flipkart acquisition. But having received not one but two multi-billion-dollar companies through the deal, the upside looks better than it once did. For a large, value-conscious public limited company with a steely-focus on profits, though, this means little without profitability.


Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 10 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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