Payments company PhonePe, all of two years old, is stepping out of the Unified Payments Interface (UPI) app box. Having made payments easy, it is now looking to spend more time with merchants. The company, e-commerce retailer Flipkart’s payment arm, acquired Zopper Retail, a point of sale (PoS) platform, in an all-cash deal worth about $6 million, earlier this week.

Zopper’s PoS helps retailers capture the billing details of their customers, and, in turn, helps them manage inventory. The investment gives PhonePe access to Zopper’s 10,000 stores and their engineering team, including its founder Neeraj Jain who will head the offline business for PhonePe. In an interview, PhonePe’s CEO Sameer Nigam clarified that it bought over the IP (Intellectual Property) associated with the product and the team involved with it, but not the shares of the company.

Being a payments app, so far, limited PhonePe to a one-sided view of how transactions were being processed—how much a customer spent and where she spent. It didn’t have insight into what customers bought. Beyond being consumer-oriented, Zopper’s PoS business now gives PhonePe the chance to interact closely with merchants.

Not just that, between owning the consumer-facing part of a merchant relationship and helping merchants manage their business, this is a $2 trillion opportunity in India. (The first $1 trillion is the payment opportunity and the second is the offline commerce opportunity). But taking payments to offline merchants is not a trivial matter. Zopper’s Jain, who dreamt of taking the company to an IPO someday, sold out for a reason, and it is not an uncommon reason.

Still, for PhonePe getting a better foothold into the offline business is mission critical as nearly 93% of the commerce happens in the offline space. And in a world that has more digital payment systems than users are aware of, PhonePe needs more than just payments to find takers among merchants.

Long live the PoS

Of the 50 million transactions PhonePe claims in a month, nearly 65% of transactions are made to merchants, says Nigam. And currently, only under 5% of the payments is from offline merchants. One of the reasons for the slow take off among offline merchants is the fatigue over yet another payment solution. There were wallets from at least 10 different companies who were all trying to acquire merchants in addition to debit and credit cards, even before PhonePe entered the market in August 2016.

One million

The number of offline transactions PhonePe saw in June among the organised retail chains

“On a sustainable basis, why would any merchant integrate 30 different wallets? The argument gets diluted over time…In the offline world, merchants are most interested in two things. Can you drive footfall into the store and can you convert those footfalls into sales and provide upselling opportunities,” says Nigam.


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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