Walmart hits gold with India Payments as PhonePe valued at $10 Billion

How do you make $10 Billion from $300 Million investment within a year? Walmart did just that with their acquisition of Flipkart in India last year. Flipkart is the ecommerce giant in India, and Walmart acquired a 77% stake in them for $16 Billion in 2018.

Flipkart came with its payments app Phonepe (pronounced as “phone-pay”). Flipkart’s founders Sachin and Binny Bansal had acquired Phonepe in 2015 as they anticipated a payments boom in India.

PhonePe received an investment of $300 Million from Walmart to grow the payments business. It was thrown into the deal as an add-on. Seems, Walmart has now struck gold!

Arunkumar Krishnakumar is a VC at Green Shores Capital, where he focuses on deeptech and sustainable investments.


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The past three years have been a golden period for the digital economy in India. Being a fan of Narendra Modi and his style of operating, I would like to think it was all triggered by Demonetisation that was brought into effect in Q4 2016.

Some may argue that it was more of a correlation than a causation, however, I believe, there is definitely a strong link. An innovation ecosystem that was largely catering to ecommerce customers, suddenly started to see the opportunities in Fintech within the country.

This momentum was led and fuelled by the government of India through initiatives such as UPI (Unified Payments Interface). In October 2019, UPI serviced over 50% of digital payments in India. Digital payments in India is still largely nascent and the best part is yet to come.

Just over three years ago, another key development happened in India. It was the public launch of Reliance Jio. This was Reliance’s initiative to drive mobile internet to the last mile in the country – and they have done just that. Over 300 Million people joined the internet in the following 24 months.


A government drive to take payments digital, and a private sector drive to make internet ubiquitous, has laid the foundations for what could be India’s China moment.

Flipkart’s board are working on a $1 Billion fundraise to run PhonePe as a separate business valued at $10 Billion. Some key metrics to note about PhonePe are as follows.

  • 33% is PhonePe’s payment market share (vs PayTM at 43%)
  • 400% growth in transaction size and volumes from June 2018 to June 2019
  • 290 Million transactions by June 2019 and $85 Billion in transaction size
  • 150 Million customers using the app
  • 5 Million Merchants
  • 41% of smartphone users had the Phonepe app, up from 26% in 2018. In Comparison PayTM was at 53% vs 51% a year ago, a relatively modest growth.

The India payments market is expected to hit $1 Trillion by 2023, that would be a 5X growth from where it is today.

We also know that Warren Buffett invested in PayTM, a bigger payments story in India. However, PhonePe are catching up to PayTM, and in some style. Amazon pay have also emerged with a 7% marketshare in the mix, but they have a long way to go to grab headlines.

With the e-commerce market in India slow down, PhonePe may end up being a bigger business than their parent Flipkart at this rate.

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