In 2018, Walmart Inc. paid $16 billion for control of India’s e-commerce company, Flipkart Online Services, and as part of the deal it got a little-noticed digital payment subsidiary called PhonePe (pronounced “phone pay” and meaning “on the phone” in Hindi). Currently, the business is one of India’s leading digital payments companies, a pleasant surprise for Walmart from its largest-ever acquisition.
Flipkart’s board recently authorized the PhonePe Ltd. unit to become a new entity and explore raising $1 billion from outside investors at a valuation of as much as $10 billion. The company’s volume and value of transactions have grown nearly four times over the last year as India’s consumers adopt the technology to transfer money digitally to businesses and to one another. PhonePe is gaining ground on Paytm, which leads the field and is backed by Warren Buffett.
Edward Yruma, an analyst from KeyBanc Capital Markets estimates the fintech company’s business to be worth $14 billion to $15 billion, separate from Flipkart’s e-commerce operation.
Digital payments in India are projected to reach $1 trillion by 2023 from close to $200 billion now, notes the Credit Suisse Group. India’s Unified Payment Interface, a technology backbone that includes 140 of the country’s banks and digital payment companies, is fueling this growth.
