How PhonePe pivoted to UPI from IMPS overnight

In 2015, mobile wallets were the flavour of the month. A new wallet was being launched every week. However, we felt that prepaid instruments created walled gardens, and Indian consumers deserved open, interoperable payment networks. So, we were pitching our vision of building an interoperable P2P-payments app on top of IMPS to bankers in Mumbai. Not surprisingly, by January 2016, most banks had unceremoniously laughed us out of the building. But then out of nowhere, NPCI (National Payments Corporation of India) announced a series of “UPI Hackathons” in February 2016. We attended the Bengaluru event where the CEO of NPCI announced that they would be launching an interoperable payments network with open developer APIs. This network, named UPI, was to be launched shortly. ICICI, Yes Bank, RBL and other banks confirmed that they would be launch partners for UPI. Despite our slight cynicism, we felt like this might be the real deal!

Overnight, we suspended all our IMPS-related experimentation, and pivoted all our efforts towards UPI. First, we started actively finding a sponsor bank for UPI. Few banks had started working on their UPI stack, and among them Yes Bank agreed to sponsor us first. The next few months were spent drinking lots of coffee and doing countless iterations on our v1 Mobile App launch.

In late August 2016, a few days after the UPI network went live, we launched the PhonePe Android app. The early days were super exciting, but HDFC, SBI, Kotak and several other large banks were still missing on the UPI network. We assumed it would take 18-24 months for them to join UPI.

Then serendipity happened again! Demonetisation was announced in November, 2016. Overnight, all major banks started joining UPI and PhonePe had been downloaded by more than 10 million people.