Flipkart-owned PhonePe allows users to link their bank accounts securely to their smartphone using National Payments Corporation of India's encrypted libraries
New Delhi: Mobile payments start-up PhonePe Internet Pvt. Ltd, which is owned by Flipkart, in partnership with private lender Yes Bank launched unified payments interface (UPI) based payments app on Monday.
PhonePe allows users to link their bank accounts securely to their smartphone using National Payments Corporation of India’s encrypted libraries.
Once linked, users can authorize money transfers or merchant payments instantly by simply entering their 4-6 digit MPIN, a personal code. Money is instantly transferred directly from the sender’s bank account to the recipient’s bank account. There’s no need to enter one time password to authorize a transaction.
PhonePe is Flipkart’s big bet on payments which till now is largely an unsolved problem in the online as well as the offline commerce.
While digital wallet providers such as Paytm, MobiKwik and Freecharge (owned by Snapdeal) have built large businesses in mobile recharge, cable and electricity bill payments, a majority of e-commerce transactions and offline transactions still happen via cash.
If PhonePe works out as planned, it may help Flipkart slash the number of cash transactions, lower costs and make its supply chain more efficient.
Flipkart had acquired PhonePe for an undisclosed sum in April. PhonePe was launched in December by Sameer Nigam and Rahul Chari, former senior leaders who left Flipkart last year, and Burzin Engineer, another former Flipkart executive.
“Existing digital payment solutions such as netbanking, debit cards and digital wallets force Indian consumers to choose between a highly secure or an easy payment experience. PhonePe offers an experience that is both 100% secure and lightning fast to use. And the best part is that now a consumer’s money will always stay in their bank account—until they spend it," said Sameer Nigam, chief executive officer of PhonePe.
Mint reported that PhonePe will launch UPI-based app this week in partnership with Yes Bank, on Monday.
“Building on the strengths of Yes Bank’s banking innovations and Flipkart group’s leadership as India’s largest e-commerce player, I am certain that this partnership will play a vital role in helping reduce cash in our economy and spurring the digital payments architecture in India," said Rana Kapoor, managing director, and chief executive officer, Yes Bank.
PhonePe app users can send or request money to friends and family, without knowing the bank account details of the beneficiary.
The app also offers bill-split, mobile recharge and utility bill payment features. It will also allow the 75 million registered customers of Flipkart, Myntra and Jabong to pay for their online shopping using PhonePe.
Last week, 21 banks including some of the largest lenders in India such as ICICI Bank, Bank of Baroda, Canara Bank and Punjab National Bank went live on the UPI platform. Two other large banks, State Bank of India and HDFC Bank are expected to launch their offerings later this year.
The National Payments Corporation of India (NPCI) started working on UPI in February 2015 and announced its launch in April this year.