Flipkart may finally have a decent payments solution to take on Paytm, Snapdeal

Photo credit: iordani.

India’s biggest ecommerce company, Flipkart, finally launched its own digital wallet PhonePe this week. The wallet officially started working on subsidiary Myntra today.

Flipkart tied up with India’s Yes Bank to launch what it is calling “India’s first unified payments interface-based mobile payments app.” UPI (Unified Payment Interface) is 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.

Flipkart bought the company in April, but the launch makes it a late entrant to the digital wallet party in India.

PhonePe will be operating as a separate business unit, and bridges a key payments gap the company was struggling with all this while. With this, Flipkart will tussle yet again with Snapdeal, which bought Freecharge last year to get ahead in the mobile payments game.

See: Snapdeal acquires FreeCharge: here’s everything you need to know about India’s biggest acquisition

Flipkart will also compete with the Alibaba-backed Paytm, which just raised more money to expand its businesses.

On Thursday morning, the company sent out an email to its customers saying all Myntra cashback rewards will be replaced by its PhonePe wallet, which can be used for purchases and refunds across Myntra, Flipkart, and other PhonePe partner merchants. For now, PhonePe will offer fund transfer, bill-splitting, mobile recharge, and utility bill payment services.

Like with the Snapdeal-Freecharge team, this makes it easier for Flipkart to create an ecosystem of businesses, aimed at keeping customers from drifting away.

PhonePe is Flipkart’s latest attempt at salvaging its top position in India’s ecommerce industry, fighting against intense pressure from Amazon India. It is also in sync with the company’s plans to make payments and purchases or customers easier.

Flipkart says it hopes for over US$1 billion in transactions from PhonePe by the end of the year.