Flipkart buys an easier way to pay

Lots of eyes on the prize. Photo credit: Kenny Loule.

Flipkart announced today it bought out PhonePE, a payments startup from India.

Although it hasn’t launched yet, PhonePe plans to operate on the UPI (Unified Payment Interface), a government-backed technology that lets people transfer money between banks and bank-to-mobile wallets using only a few identifiers, like their phone number and their Aadhar number, an Indian digital identification number.

See: India makes a big move toward a cashless society

The two bugbears of ecommerce are logistics and payments, so there’s always something in the news about one or the other. Without its own payment wallet, Flipkart has had to rely on cash-on-delivery for a while.

It last month launched its own mobile wallet, Flipkart Money. It uses the technology from FX Mart, which it had bought out in September 2015. FX Mart is a semi-closed wallet, meaning that it can be used on Flipkart and other chosen merchant sites.

Flipkart Money was launched 18 months after it shut down PayZippy, a mobile wallet that it started too early and without enough focus to do well. Flipkart’s rival Snapdeal owns payment wallet Freecharge, and India’s largest payment wallet Paytm entered the ecommerce game a couple of years back.

See: Can mobile wallet startups survive if banks innovate?

Still, the mobile wallets landscape is changing fast, and Flipkart has taken notice of that. The launch of the UPI has given mobile wallets a scare, because it solves the problem of annoying bank procedures, which these mobile wallets are also trying to address. Now that these procedures are getting easier, it’s hard to imagine where they’ll fit in.

It’s not clear whether banks or mobile wallets will win this last-mile transaction bit, but Flipkart is placing its bets on the two most likely possibilities.