Enhancing Digital Payments: PhonePe Success Story & Business Model
In this digital era, everyone knows how to use various online payment platforms. Such platforms do not have a single target market, instead, they target all sorts of people in the country having a smartphone.
Similarly, PhonePe the Indian digital payments and financial services company is making amazing records and headlines since 2022-23. Recently it seemed that phonepe beat paytm in recent years. Even previous to that, Indian digital payments and financial services made enormous growth not only in the Indian market but, in some international markets as well.
PhonePe Latest News
Every day, digital payment platforms are making new approaches and coming up with new ideas. This is helping the Indians to learn and evolve in the digital market quickly. Similarly, to cope with its head-to-head competitors, PhonePe is bound to launch amazing offers, features, or facilities to Indian customers for better attraction.
Recently, PhonePe’s new advertisement has revealed how the brand keeps the phone numbers of its consumers private. They do this just to safeguard all the consumers’ numbers from potential scams or fraudulence.
The advertisement from PhonePe revealed how the application does not share the consumers' numbers with any other third-party organizations so the consumers are not bothered with unnecessary calls. The advertisement also features a user insuring their car using PhonePe.
It seems like consumers are quite happy with this feature or advertisement. As of December 2020, PhonePe had already processed over 11 million insurance premiums.
Another news has popped up where PhonePe is leading in digital monthly bill payments. The volume was seen surging by 50% in just one year. PhonePe is currently leading the charts with 46% market share by number of bills paid and has more than 50% market share in the value of bill payments during April 2023.
Origin of PhonePe
The origin of PhonePe goes way back to 2015. This Indian digital payment company was founded back in December 2015. Today, this company has emerged to be India’s largest payment application. The headquarters of this company is located in Bangalore, Karnataka, India.
It was in April 2016, PhonePe was acquired by Flipkart. Now, the FxMart License was transferred to PhonePe and it was rebranded as the PhonePe wallet and all of it was a part of the acquisition.
PhonePe is currently available in 11 different Indian languages. People from within this language usage can use the application very easily. In 2017, PhonePe launched a low-cost POS device built in India. This Bluetooth-enabled device looked like a calculator and works with AA batteries.
This helped the company to serve more than 10 crore users in June 2018. On the other hand, PhonePe is accepted as a payment method for more than 3.5 crore offline and online merchants. The penetration of PhonePe became so easy that it crossed 10 crore transactions a day back in April 2022.
It was in 2019, PhonePe launched a tax-savings fund to help consumers minimize their tax burden. This surely helped lots of taxpayers in a hugely populated country like India. Again in 2020, PhonePe became the first digital payment platform to launch international travel insurance. Slowly, this company started introducing insurance for consumers for both national and international travel.
Business Model of PhonePe
PhonePe charges commission on the payments made by customers using the online application or to offline merchants. On the other hand, the UPI transactions based on IMPS do not charge any extra commission from banks. Moreover, using any services that are available on PhonePe such as bill payments, gift vouchers, digital gold, mutual fund, or anything PhonePe earns a commission.
Offering such services has helped PhonePe gain lots of clients. Some of the famous clients of PhonePe are the following:-
- AIS Glass
- Amsoft Systems
- Asian Paints
- Bacardi
- Bira 91
- Coca Cola
- Chimes Group
The key role of PhonePe to all of its clients is to handle high-volume digital payments. Recently, Rahul Chair the co-founder and CTO of PhonePe revealed that PhonePe will handle high-volume digital payments from its clients without sacrificing performance or dependability.
PhonePe is planning to strengthen its core systems. Chari also revealed that they will emphasize more of PhonePe’s databases, data queries, and in-memory computations to ensure the system is not compromised.
PhonePe has partnered up with lots of amazing organizations. The first partnership was back in 2016 with Yes-Bank to launch a UPI-based mobile payment app. It has also partnered with Extreme IX to reduce latency during transactions. PhonePe has also partnered up with Axis Bank on UPI multi-bank model. As of June 2020, ICICI Bank became the second official UPI partner of PhonePe just after Yes Bank.
Services Offered at PhonePe
PhonePe or any other digital payment application is all about services. Without offering smooth and unique services they will surely not survive in the Indian market. Now, PhonePe is known for its wide range of services to Indian consumers also including PhonePe Loan. Once you open a PhonePe application you will see only services being provided by the company.
Using PhonePe users can easily send and receive money, electricity bill payments, recharge mobile, recharge DTH cable, and data cards, make various utility payments, and many more. Now, other than making payments users can take various business solutions as well from the company. The company also offers a long list of insurance and investment plans to consumers.
Some of the business solutions offered by PhonePe are Payment Gateway, Express Checkout, PhonePe Switch, SmartSpeaker, and Offline Merchant. On the other hand, some of the investments offered by PhonePe are motor insurance, car insurance, bike insurance, life insurance, term life insurance, travel insurance, Guaranteed Returns Plans, Health Insurance, and many more
Revenue Model of PhonePe
Let us now know, how the business model of PhonePe works with revenue. PhonePe gets a commission from the promotion of its various products on its application. Other than this, PhonePe also collects revenue from a partner through the recharge platform. It also earns some amount of commissions from the telecom companies from local shops when customer recharges them.
Moreover, the company earns a commission from any online purchase users make via the app. PhonePe has a homogeneous database that holds the key to profit. The database offers several valuable insights this is where PhonePe is changing the game.
The database shows the customers how they are doing this transaction, and based on their transaction how much they are spending on a daily basis, monthly, and where are they spending. All of these are been tracked down and the database of a customer in the form of a profile is made.
Business Growth of PhonePe
PhonePe continues to grow its customer base through rigorous promotions. Now, the promotions are done for any new feature they have added or it could be for their new partnerships. For every promotion done by PhonePe, they are always attracting customers from all parts of the country.
Within 2021, PhonePe has been hailed as the most popular digital payment service in India. In the same year, this company recorded $2 billion in monthly transactions as of October 2021. Other than that, PhonePe was also known as the second-largest valued consumer-facing fintech startup, it was valued anywhere between $5.5-5.7 billion just after PayTM.
As of FY22, PhonePe saw its revenue grow 138 percent to Rs 1,646 crore, while its losses narrowed by 15 percent year on year to Rs 671 crore. As of 2023, PhonePe has raised $850 million in its latest funding. 85% of the $1 billion funding round started raising in January this year.
Controversies
There have always been ups and downs in the business line. Similarly, PhonePe did see some ups and downs while conducting its business. Back in March 2020 when Yes Bank brokedown tens of millions of merchants in India were struggling to make online transactions. This was because all the transactions from PhonePe were conducted through Yes Bank only.
Initially, PhonePe faced lots of hardship, their entire team worked all night to get services back up as soon as possible. Thankfully, PhonePe and their team did their best and resolved the issue as soon as possible.
Another controversial statement was made by CEO Sameer Nigam, saying ‘Bulli Bai’ app creators should be ‘jailed for life’. Controversies erupted when several Muslim women took to social media saying their photos had been illegally uploaded for auction. There were several screenshots of their social media photos being shared on GitHub. Bulli Bai app performed the same so this is where the CEO got angry and made his statement through his official Twitter handle.
Conclusion
Ever since PhonePe has been established in the market it has only seen growth. The amazing features being offered by this app are catching all the customers in today’s digital era. Now, the company is expecting to grow more by the end of FY2024. Other than these, the services and transaction processes through this app are smoother than many of its competitors.