In the race to make Unified Payments Interface (UPI) a popular way to pay, PhonePe was the first to shoot right off the block when the whistle sounded. Within a week after the payment system was launched in August 2016, PhonePe was out with its app.

In these nine months, the young payments app has already come a full circle. An acquisition by Flipkart even before its product was out, a policy like demonetisation that tried to upend things for good, an ambush from unexpected competitors, and banks preying on the new at the slightest opportunity.

Practical lessons aside, post-demonetisation, PhonePe has managed to land on its feet. With 3.5 million transactions, it has a 38% share of the total UPI transactions in May. In December it saw 1.1 million transactions, says Sameer Nigam, founder and CEO of PhonePe. Meanwhile, its largest competitor, BHIM’s share of UPI transactions still holds the rein accounting for 42%. 

UPI is touted as a convenient way to send money between two people or as the industry calls it, between peer to peer. In what could give it new wings, The Ken learnt that ride-hailing apps Uber and Ola too are including UPI as a payment mode, in addition to wallets, cards and cash. Ola has already rolled this out to a few limited users. And Uber is working with Axis Bank to integrate it as a mode of payment within the app, said three sources close to the development.

But UPI’s merchant friendliness is unproven. For it to truly come up on the top as the go-to way of payment, it needs more merchants accepting it.

PhonePe is making overtures towards just that.

About 25% of 9.2 million UPI transactions in May was for paying online merchants

AP Hota, CEO, NPCI

By virtue of being attached to the hip to Flipkart, it has had the advantage of having an early exposure to online merchants. It lets people pay online on Myntra, Jabong and Flipkart, giving it instant access to over 75 million online shoppers. Today, 50% of its transactions come from these merchants, claims Nigam. That’s better than what UPI, on the whole, has managed to achieve as a payment system so far. About 25% of 9.2 million UPI transactions in May was for paying online merchants, said AP Hota, the CEO of National Payments Corporation of India, which runs UPI. He says most of it is coming from PhonePe today for things like mobile recharges.

Now, Nigam is taking the app to offline merchants. It’s an all important move for PhonePe if it wants to be of any real relevance.

AUTHOR

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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