India's leading fintech startup, PhonePe, has received an additional $100 million investment from General Atlantic, just four months after the company led a $350 million funding round. With the latest investment, PhonePe has now raised a total of $850 million in an ongoing financing round amidst a slowing global economy. Currently valued at $12 billion, the Bengaluru-based startup plans to raise another $150 million as the funding round continues.
As India's most valuable fintech startup, PhonePe competes with major mobile payment platforms like Google Pay and Paytm, the latter of which is valued at nearly $5 billion. After completing a full separation from e-commerce giant Flipkart last year, PhonePe now dominates transactions on the UPI platform, a network built by a coalition of retail banks in India. Processing over 8 billion transactions per month, UPI has become the dominant method for online transactions in the country.
PhonePe and Google Pay together account for over 80% of all UPI transactions, with PhonePe holding a 50% market share by value. The company is not slowing its growth, projecting to process transactions worth $1 trillion annually. Walmart, which also holds a majority stake in Flipkart, said the separation of Flipkart and PhonePe is similar to what happened with eBay and PayPal, where independent operations allow each company to pursue separate initiatives.
The ongoing investments come as PhonePe focuses on expanding its product offerings. Earlier this year, the company introduced Pincode, a hyperlocal commerce app powered by the Indian government’s Open Network for Digital Commerce (ONDC). This initiative aims to democratize the e-commerce landscape by providing a zero-commission platform. PhonePe has committed to investing significant effort in Pincode over the coming years, helping to empower Indian shopkeepers across the nation.
Leveraging its 450-million-strong registered user base, PhonePe is also venturing into additional financial services, including wealth management, lending, stockbroking, ONDC-based shopping, and account aggregation. Initially, market share restrictions by the National Payments Corporation of India (NPCI) threatened to hinder PhonePe's growth. However, with the NPCI now extending the compliance deadline to 2025, the fintech giant has an additional two years for rapid expansion.
In light of these favorable developments, the Reserve Bank of India has decided to abandon a high-profile project initially planned to compete with the UPI platform. As India's fintech landscape continues to evolve, PhonePe is well-positioned to maintain its dominance in the market and further extend its product offerings. No-code platform solutions like AppMaster can potentially enable new fintech players to enter the market, creating seamless solutions to drive the industry forward.
