The digital payment scenario has changed drastically since the demonetization in 2016. As a result, India’s volume of digital payments has increased by 33% year-on-year (YoY) during the financial year 2021-22.
7,422 Crores of digital payment transactions were recorded during this period, rising from 5,554 in 2020-21. This PhonePe case study will talk about the most popular online payment app.
In India, digital payment apps have grown considerably, mainly after the pandemic, which forced us to stay indoors and order food items through different online platforms. As a result, most stores and aggregator platforms stopped accepting cash payments to avoid contact with delivery agents. It led to the emergence of digital payment apps.
According to NPCI data, PhonePe, with 212 crore transactions, was the most popular UPI app during February 2022, with Google Pay behind it with 152.4 crore transactions.
PhonePe is an online payment app that lets customers pay bills, transfer money, invest in gold and mutual funds, get life insurance, and make instant payments to their offline and online stores through UPI or wallet. In this PhonePe case study, we will discuss everything about PhonePe.
This digital payment app was discovered with a motto to be a universal, safe, and seamless mobile digital payment ecosystem.
It is India’s largest digital payment platform. More than 300 million registered users transact with over 200 million businesses using this app.
PhonePe serves the whole nation with various income groups and transactions. In addition, consumers transact with merchants across a wide range of services and transaction volumes, from purchasing groceries to investing in gold.
Here, in this PhonePe case study, we will look at the journey of PhonePe, its success story, its marketing strategies for growth, the founders, and PhonePe plans.
PhonePe Case Study- About PhonePe
PhonePe case study reveals that it is the most common e-Commerce payment system. It was founded by Rahul Chari, Sameer Nigam, and Burzin Engineer in 2015, with headquarters in Bengaluru. It is the 1st payment app in India constructed on the Unified payments interface.
Flipkart bought the company in 2016 and renamed it a PhonePe wallet. Within three months of the launch, more than 10 million users downloaded PhonePe.
In 2018, PhonePe became the fastest Indian payment app to receive 50 million badges on the Google Play Store. This online payment app is designed on the Unified Payment Interface (UPI) platform.
UPI payment system lets money transfer between two bank accounts using a smartphone. In addition, UPI enables a customer to pay directly from a bank account to various merchants, both offline and online.
Moreover, while making payments through the UPA system, you don’t have to use your credit card details, IFSC code, or net banking password.
Different Uses of PhonePe
The phonePe case study discusses the various uses of PhonePe.
You can use PhonePe to:
- Recharge prepaid mobile number
- Send or receive money by entering their name, number, or VPA
- Check the balance in your account
- Pay using QR codes
PhonePe Case Study- Revenue Model of PhonePe
PhonePe receives its commission by promoting its different products on its app. In addition, it collects profits from a partner through the “Switch” platform. Recharge centers/ points generally earn a commission from the telecom brands when clients recharge their phones.
Similarly, PhonePe also receives a commission when the users pay through the app. PhonePe has a vast user database. Today, data plays an important role when it comes to earning profit.
The database provides various essential insights. For example, the total amount of money they transfer defines the payment patterns.
In addition, one can determine a customer’s buying pattern and the store or retailer’s details. PhonePe continues to expand its customer base through promotions and offers and promotions on the app.
On October 23, 2021, this leading digital payment platform announced it would charge nearly Rs 2 as a processing fee against all the mobile recharges made through the digital app.
Although PhonePe was operating as a “small scale experiment,” as called by the Fintech giant, and was not working in the full-fledged form, it planned to charge Rs. 1 for any recharges done between Rs. 50 to Rs. 100, and for recharge above Rs. 100, they would charge Rs. 2.
PhonePe case study reveals that it is the first name in the online payment sector to develop the idea of processing fees.
It has reportedly disturbed several national customers, who had talked about their issues through tweets and other social media channels.
The rival of PhonePe, Paytm, also did not support this idea of charging the customers. However, with the rise in digital payment apps, we can say that they play an essential role in shaping digital marketing strategies.
PhonePe Case Study- Challenges Faced by PhonePe
Starting PhonePe was a challenge as the industry was relatively new and unexplored. However, the PhonePe acquisition by Flipkart settled things a bit.
ICICI bank blocked PhonePe on January 14, 2017, as the PhonePe transactions did not meet the NPCI regulations.
Though NPCI initially instructed ICICI to let UPI transactions through PhonePe on January 19, 2017, the regulatory body confirmed that the digital payments service provider had violated the norms.
Airtel was the other company that had blocked PhonePe transactions on its platforms.
It directed PhonePe to close its operations on Flipkart’s website, which helped the company support the terms stated in the recent verdict from NPCI.
In February 2017, the app resolved the issues with Airtel and ICICI.
PhonePe Case Study- Users of PhonePe
The PhonePe case study says that 1 in 4 Indians now uses Fintech platforms, PhonePe, when it crossed 350 million registered users.
The user base of the Fintech major has risen by 28%, from 273 million in January 2021 to 350 million in December 2021.
PhonePe recorded an annualized total payment of $651 billion in December from a user base of 150 million active users monthly.
The company has registered nearly 350 million users, meaning 1 in 4 Indians currently use PhonePe.
Moreover, registered users increased by 28% in 12 months- from 273 million in January 2021 to 350 million in December 2021.
PhonePe gave credit for its growth to the technology team and its unrelenting quest to deliver the industry’s highest end-to-end transaction success rate and its offline sales efforts to create the most prominent merchant acceptance network.
The team believes that it will continue pushing hard to deepen online payment adoption and merchant acceptance all over India.
PhonePe Case Study- Acquisitions by PhonePe
Now, PhonePe has acquired two companies- Zopper and Indus App Bazaar. The last acquisition by the company was of Indus App Bazaar on May 19, 2021, at a deal price of $60mn.
PhonePe announced an ESOP buyback of nearly 135 crores. As of November 19, 2021, the liquidity event will let the company’s leadership sell around 10% of its vested stock.
On the contrary, the present employees can sell nearly 25% of their vested options. However, the founders of PhonePe could not participate in this buyback.
PhonePe Case Study- Competitors of PhonePe
A few of the top competitors of PhonePe are PCKT, Juspay, BharatPe, Paytm, MobilPay, and Roomeo.
- Juspay, founded in 2012, is an online platform for making mobile-based payments.
- PCKT, founded in 2003, is a fintech company. It offers payment services to customers.
- Paytm, founded in 2010, innovates the Indian eCommerce payment system.
- BharatPe is a platform, especially for businesses and retailers.
- Roomeo, founded in 2011, is a popular online payment platform.
- MobilPay, founded in 2010, offers mobile marketing and payment services.
PhonePe Case Study- Growth of PhonePe
As per the PhonePe case study, in January 2022, PhonePe recorded an annualized total payment value of USD 651 billion. Furthermore, in December 2021, the online payment app registered 150 million active users monthly.
The number of registered users has increased by 28 percent from 273 million in January to 350 million in December 2021. PhonePe team was excited to cross the 350 million registered users and emerge as one of India’s largest digital payments platforms.
PhonePe also processed over 500 million transactions at physical stores in December 2021. It was possible because of the rapid growth of PhonePe’s merchant coverage covering 25 million stores across 15,700 villages and towns, comprising 99 percent of pin codes in India.
In 2022, about 461 Cr UPI transactions worth INR 8.31 Lakh crore were recorded. With around 48.7% market share, PhonePe did 21,403 successful transactions worth INR 4.05 lakh Crore in January 2022.
PhonePe expects an EBITDA (earnings before interest, tax, depreciation, and amortization) profit of Rs 1,797 crore in 2025. The company expects to earn a revenue of Rs. 9,139 crores by 2025.
