Flipkart acquires payments start-up PhonePe

E-commerce marketplace Flipkart Ltd has acquired Payments start-up PhonePe Internet Pvt. Ltd. which was launched last December by former Flipkart executives. Flipkart was in talks to acquire a majority stake in the company for an amount between $10 Million and $20 Million. The PhonePe team will join Flipkart but will function as an independent business unit.

Payments have been one of the biggest hurdles for mass adoption of online shopping in India. UPI has the potential of transforming the entire payments ecosystem in the country. The acquisition of PhonePe is in line with Flipkart focus on driving innovation on the payments front. PhonePe is Flipkart third acquisition in payments, after it bought payments start-up NGPay in 2014 and FX Mart Pvt. Ltd which owns a prepaid wallet license.

PhonePe hasn’t launched a product but is working on a payments solution around the Unified Payments Interface an initiative of the National Payments Corp. of India, which will allow fund transfer between banks and will make inter-operability between banks and instant payments possible by using a single identifier like the Aadhaar number or a virtual address.

The UPI is part of a set of government programmes and technologies, together called India Stack that companies use to slash costs in offline authentication and provide services legally approved by the government to anyone with a mobile phone. The UPI is set to be formally launched in April. PhonePe mission is to significantly improve the online and offline digital payments experience for Millions of Indian customers.

Ola acquires Qarth

Taxi hailing service Ola, run by ANI Technologies Pvt. Ltd, has acquired Mobile payments company, Qarth in an attempt to strengthen its mobile wallet service Ola Money launched in November last year. Qarth, which runs a mobile payments app called X-Pay, is Ola second investment in the payment space.

The move comes at a time when e-commerce leaders such as Flipkart Ltd and Snapdeal are strengthening their payment business through acquisitions. Flipkart acquired a majority stake in payment services startup FX Mart Pvt. Ltd in September last year, while Snapdeal acquired utility payment service company Freecharge for $400 Million in March last year, in the biggest ever consumer Internet deal in India.

Ola Money cannot only be used to make payments for Ola rides, but also for other online platforms such as Online eyewear store Lenskart, hotel aggregator Oyo Rooms, music streaming app Saavn and hyperlocal electronics retailer such as Zopper. Such services throws open an additional revenue stream for Ola, with the ride hailing service still being loss making, and also puts the service in direct competition with bigger rivals such as Paytm and Freecharge.

Ola, which launched food and grocery delivery services last year, shuttered both verticals earlier this month to focus on its core offering of transportation. The move came amid growing competition from Uber, which claims about 50% of the Indian Market. The two companies have rolled out services such as ride sharing, carpooling and even bike taxis and have been slashing fares in an attempt to acquire customers. 

Shopclues to buy Mobile Payments start-up Momoe

Online shopping platform Shopclues.com is in advanced talks to buy mobile payments firm Momoe Technologies, as it looks to add a payment service to its platform. The all-stock deal, could value Bengaluru based Momoe at anywhere between $8 Million and $15 Million.

Shopclues was looking to invest close to $50 Million in either buying stakes or acquiring start-ups in the Hyperlocal, ad-tech and internet payments domains in order to accelerate expansion in India’s fast growing e-commerce market. Shopclues will use Momoe Technology to strengthen its payment network for merchants on its platform and will further integrate it with its hyperlocal commerce business.

During the past 12-18 months, large e-commerce firms have made investments, acquisitions and partnerships with payments companies to claim a share of the digital payments vertical, which helps reduce the dependency on cash and makes it convenient for online shopping. In February, Amazon announced acquisition of online payments firm Emvantage Payments Pvt. Ltd.

Snapdeal acquired mobile wallet firm FreeCharge in April 2015, and Flipkart bought payments services company FX Mart Pvt. Ltd in August 2015. Momoe was founded in 2014. The company primarily provides payment solutions for offline merchants. It allows customers to make digital payments using the Momoe app on their mobile phones. Momoe rose close to $1.2 Million from IDG Ventures India, Jungle Ventures and India Quotient. India’s e-commerce market is estimated to touch $100 Billion by April 2020.

Amazon to buy Emvantage Payments

Online marketplace Amazon said it will buy online payments firm Emvantage Payments Pvt. Ltd. to develop India specific payments solution. The announcement comes shortly after Amazon infused an additional Rs. 1696 crore into its India Unit (Amazon Seller Services Pvt. Ltd) in December 2015, to take on local rivals Flipkart and Snapdeal.

Large e-commerce companies have made significant investments, acquisitions and partnerships with payment companies to claim a share of the fast growing digital payments vertical which helps reduce the dependency on cash and make it convenient for online shopping. The Indian e-commerce market is estimated to grow to $100 Million by April 2020. Emvantage employees will join Amazon payments team.

Jasper Info Tech Pvt. Ltd. run online marketplace Snapdeal launched its mobile wallet through its utility payments unit FreeCharge in September 2015. The company had set aside Rs. 1000 crore towards cash back offers and discounts among other initiatives to attract more consumers to FreeCharge Digital Wallet. Snapdeal had acquired FreeCharge for $450 Million in April 2015.

Flipkart had acquired payments services company FX Mart Pvt. Ltd. in August 2015. ANI Technologies Pvt. Ltd. cab aggregator Ola had made its Ola Money digital wallet Available for making payments in other e-commerce platforms. 

Flipkart acquires FX Mart

India’s largest e-commerce firm Flipkart has bought payment services start-up FX Mart Pvt. Ltd, which holds a prepaid wallet license, so as to add a payment service on its platform and on that of its unit Myntra. Singapore registered Flipkart Payments Pvt. Ltd, paid Rs. 45.4 crore for a majority stake in FX Mart and two senior Flipkart executives also joined the board of FX Mart.

FX Mart owns a coveted prepaid license issued by Reserve Bank of India. The license will allow Flipkart to offer a digital wallet on its app and avoid paying a cut to external wallet providers. The license can also potentially help Flipkart increase the proportion of cashless transactions. A majority of shoppers still prefer paying cash for online purchases, which creates operational headaches for e-commerce companies.

With FX Mart License, Flipkart which has been a laggard in payments plans to launch a payment service on its app as well as Myntra within the next three months. The company also plans to offer the payment service on third party sites and apps later. The current market leader is Paytm followed by a host of smaller firms such as Oxigen Services India Pvt. Ltd and One MobiKwik Systems Pvt. Ltd.

India has several others payment services start-ups including Citrus Payments Solutions Pvt. Ltd, PayU Payments Pvt. Ltd, CCAvenue and Zaakpay. FX Mart offers electronic payments, foreign exchange and travel services. FX Mart is Flipkart second acquisition in digital payments. It bought another payments start-up NGPay last year.