PhonePe to bring new revenue streams in financial services & consumer engagement


Phone Pe, income streams include payments income, distribution income from in application distribution fees, financial services including mutual funds, digital gold, insurance, and advertising. The company will bring in new income streams on the consumer engagement and discovery side, and financial services such as working capital and loans for the 15 million merchants on Phone Pe. The company has set a target of 25 million merchants by Dec 2021, of which nine million will be in rural areas. We will have fifteen thousand agents to go and enable digital payments in six thousand talukas in India.

The company believes that in the next 3-4 months the new board will be fully populated. Phone Pe has Rohit Bhagwat, who is an independent director and a financial services veteran. Binny Bansal, the most successful consumer tech entrepreneur in India and an investor himself, Rahul Chari, co-founder and CTO, Phone Pe and 2 Flipkart appointees who are from the Walmart family and 2 more independent directors who are still to be placed. One will be a Phone Pe minority investor, will probably be somebody from Tiger Global or Tencent. Phone Pe is looking to add some local firepower in terms of industrialists or people in the financial services sector as that’s a big area of investment for the company.

The company right now has only under 500 of 2,200 employees are under the ESOPs. Given that the company has raised a war chest and got our investors on our board aligned to going the maximum, the company thinks to spend more on capital outlay than we had originally planned. At the operating level, will be profitable in 2 years, but if the company keeps expanding on our CAPEX or keep investing in the brand, profitability may be delayed. Conventional profitability comes later because the company keep redeploying capital into the business to grow and scale it.

In 2021 Phone Pe may get into lending with partners. Until the non-performing asset data are revealed on the retail side post the pandemic people money and hoping to collect it without having a collections army is just hard. In the company’s 3rd year, in January 2019, it had announced the target of 250 million users by 2020 and got there a few months early. Phone Pe is planning to get to 500 million users by the end of 2022. Right now, the company has 265 million and looking to double that number in the next 2 years.

PhonePe launched ATMs in Feb 2020 and by March 2020 the company had almost 2 million merchants enabled and the transactions had hit 1 lakh a day and then the lockdown happen. For 7-8 weeks, no one ventured out. During that time, the company switched all their focus on enabling delivery using digital payments with Flipkart and other players as well. Most people stopped wanting to pay cash. Phone Pe is focused on digital payments growth.

Phone Pe has scratched the surface with 300 applications on their Switch platform across categories including pharmacies and healthcare, food, transit. Etc. Peer-to-peer chats have been live on Phone Pe for about a year. The company has 300 mini-apps, 15 million stores which you can interact with and discover, payments and services, everything except lending at this point.


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