PhonePe's super-app platform 'Switch', a one stop solution for customers

Aims to provide one-clock entry to entry point to several online merchant platforms on 'PhonePe Switch'

PhonePe, a Fllipkart Group company which started its journey in late 2015 as a startup focusing on digital payments, is all set for its next phase of journey by hosting other online commerce apps on its platform and driving traffic and facilitating transactions. The Bengaluru-based firm, starting today, unveiled a new in-app section called 'PhonePe Switch' which acts as a 'super app' integrating several other merchant apps and provide its 150 million odd users a single platform for their various online shopping needs.

"PhonePe Switch emphasises our efforts to build a partner app ecosystem which offers our users a very convenient way to access and engage with multiple apps," said Sameer Nigam, co-founder and CEO, PhonePe. “While start-ups are able to acquire high-quality users at low costs, larger partners get help in specific areas like driving non-cash payments, growing their business in select geographies etc.,” he added.

Currently managing around 50 such apps in categories such as food, travel, local commuting, grocery and others, the payments firm expects the number to touch 500 by the year end. Some of the third-party apps that are currently hosted on its platform include Ola, Eat.Fit, Grofers, IRCTC and MakeMyTrip. A PhonePe user can access, say, the Ola app, from within PhonePe without having to log into the Ola account or come out of PhonePe.

“PhonePe Switch and the other financial services products we are in the process of launching will be revenue drivers for the company in the long-run and help us achieve profitability, an area we will dedicatedly focus on starting next year,” added Nigam.

PhonePe ‘Switch’ is a major part of the company’s strategy to become an Internet services aggregator, which people will use for online shopping to ordering food or cabs in place of separate applications for these use-cases. Currently, PhonePe charges a small fee for a merchant transaction using its payments platform.

Rituraj Rautela, head of Apps Platform, said ‘Switch’ allows app developers to run targeted offers and marketing, besides testing new features faster on PhonePe’s user base. “Switch is a new distribution platform for our partners, who may see lower cost of acquisition for new users through us,” said Rautela.

Allowing users, who are already logged-in onto the PhonePe, to use third-party services within its app and over the same user experience, is also an attempt to lock-in users to its ecosystem.

Looking for growth

PhonePe had 60 million monthly active users (MAUs) in August, of which 40 million transacted at least once, totalling to around 380 million transactions in the month. The company claims to have enabled $100 billion worth of transactions on an annualised basis.

According to Nigam, while PhonePe has seen handsome growth over the past years, the focus is going to be on monetization now. In March, the company launched tax-saving mutual funds through partnerships with ICICI Prudential and Aditya Birla Sun Life. Interestingly, Paytm is also going after wealth-management and had launched a full-fledged independent service Paytm Money recently. Last week, it announced to enable users to subscribe to IPOs using its UPI enabled payment gateway.

In a report early this month, investment bank Morgan Stanley said financial services could be a strong revenue stream for PhonePe. “If PhonePe can monetise financial services, we see it gaining a substantially higher market share than in our base case. We model bull case revenues of $70 million from payments, $690 million from distribution of financial services and $2.5 billion from consumer lending,” by 2029, the report added.

In FY18, PhonePe made Rs 43 crore in revenue while posting a loss of Rs 800 crore.

“As more and more people transecting online and newer use-cases emerging, there are strong tail-winds for this sector,” said Nigam, adding that he expects phone pay to cross 90 million MUA mark by the year-end.