PhonePe gave Flipkart one of the best returns in history ever!
India has seen an increase in the use of digital payments in recent years as a result of the government’s aim for a cashless society and the popularity of smartphones. The goal of PhonePe, a startup in digital payments, is to make payments simple and available to everyone.
The same year, Flipkart, the top e-commerce site in India, bought it. However, the payment giant broke from Flipkart in 2020 and became a $12 billion standalone company, making it one of the largest returns in history.
Flipkart’s Acquisition of PhonePe
In order to provide its customers with a smooth payment experience, Flipkart purchased PhonePe in 2016 with the intention of integrating it into its e-commerce platform. Following the acquisition, PhonePe gained access to the enormous Flipkart client base and quickly established itself as the go-to payment method for millions of Flipkart users. PhonePe quickly established itself as a strong player in the field of digital payments as its transaction volume increased by leaps and bounds.
PhonePe’s Separation from Flipkart
Flipkart made the decision to split from PhonePe in 2020 and turn it into a separate company. The Reserve Bank of India’s rule that no single business could own more than 30% of a payments platform was the impetus for this decision, which was motivated by regulatory concerns.
Flipkart also saw this as a chance to release PhonePe’s full potential, which was being constrained by its integration with the e-commerce platform. Having to assemble its own infrastructure and technological stack from scratch, PhonePe faced difficulties after the split. It was successful in doing so, nevertheless, and very quickly began running on its own.
PhonePe’s Valuation
A remarkable leap from its $20 million acquisition cost in 2016 to PhonePe’s $12 billion valuation in 2021. As a result, it became one of the most valuable startups in India and a strong competitor in the field of international digital payments. Numerous elements, including PhonePe’s growth trajectory, user acquisition approach, and cutting-edge product offerings, might be blamed for the increase in valuation.
The Impact of PhonePe on Flipkart’s Business
The influence of PhonePe on Flipkart’s business will be covered in this section:
Customer Engagement Has Increased
Flipkart has seen a boost in customer interaction thanks to PhonePe. Customers are more satisfied as a result of being able to make payments swiftly and securely.
Higher Revenue
Additionally, PhonePe has helped Flipkart increase its revenue. The site levies a transaction fee, which has boosted Flipkart’s earnings.
Competitive Benefit
Flipkart now has a competitive advantage in the e-commerce sector thanks to PhonePe. It has helped Flipkart stand out from its rivals and expand its market share.
