PhonePe Success Story and Marketing Strategy | Case Study

PhonePe Success Story and Marketing Strategy – The landscape of digital payments has changed drastically ever since the demonetization at the end of 2016. For the unversed, PhonePe is a digital wallet and online payment app that allows users to pay bills, transfer money, invest in mutual funds and gold, buy life insurance and make instant payment to your favorite online and offline stores via wallet or UPI.

In this blog post, we will take a look at the journey and success story of PhonePe; the marketing strategies that have led to its overwhelming success, the names of the individuals/companies that are funding its operations and what the future looks like for them.

PhonePe Founders

3 faces have been an integral part of PhonePe, including:

1) Sameer Nigam

Sameer Nigam laid the foundation of PhonePe in 2015. He is serving as the Chief Executive Officer of the company as of September 2021. Prior to PhonePe, Sameer Nigam served as the SVP Engineering and VP Marketing at Flipkart.

2) Rahul Chari

He is presently serving as the Chief Technology Officer at PhonePe. Mr. Chari has 20+ years of experience spanning embedded systems, e-commerce platforms, enterprise software development and apps.

3) Burzin Engineer

Burzin Engineer is working as the Chief Reliability Officer at PhonePe. Boasting an experience of over 20 years, he has built web scale infrastructure and led multiple engineering projects at PhonePe including running and building the company’s web serving layer, cloud systems, network, CDN and storage.

PhonePe Journey and Timeline

Here is a list of all the accolades and achievements that PhonePe has garnered since its launch:

2015

PhonePe was founded

2016

Flipkart acquires PhonePe

2017

• PhonePe crosses 10 million downloads
• Becomes the #1 Finance App on Apple App Store & Google Play Store
• Enjoys the highest number of UPI transactions

2018

• Achieves the milestone of crossing 1 billion transactions
• Launches micro-apps on the platform

2019

• Awarded with “Best Mobile Payment Product or Service” at 9th IAMAI Indian Digital Awards
• Featured among the top 10 most trusted digital brands in India
• Achieves another milestone with 2 billion transactions on the app

2020

• Launches PhonePe ATM across 10 lakh stores in more than 300 cities
• Adds the feature to buy insurance including motor, travel and coronavirus insurance
• Achieved the milestone of 250 million registered users
• Enjoyed a share of over 40% in UPI Transactions

PhonePe Revenue Model

Over the course of years, PhonePe has added many sources of revenue to its business and now it isn’t just a digital wallet/UPI-based payment platform. PhonePe generates revenue from commission from a variety of sources:

• Mobile recharges and postpaid bill payments
• Utility bill payments (gas, electricity and water)
• DTH recharge
• Bu
• Selling Insurance
• Selling Gold
• By charging merchants a commission on every sale through PhonePe UPI/Wallet
• As a data miner for Yes Bank
• Mutual funds
• Bus, train and flight reservations

PhonePe Funding

The online payment app has raised nearly $1.5 billion through multiple rounds of funding. Homegrown E-commerce giant Flipkart has been the major investor in PhonePe. Notably, Walmart too invested in the platform in the December 2020 round of funding.

The most recent funds came to the Singapore unit of PhonePe in the form of $66.5 million (roughly INR 500 crore) in a funding round led by Chinese technology firm Tencent Holdings along with participation of New York-based investor Tiger Global.

Flipkart continues to be the largest stakeholder in PhonePe with 87.30% stake, followed by Walmart, as reported by EconomicTimes.

The Evolution of PhonePe

What started as a digital wallet and UPI-based payments app is now a multi-purpose platform which can do many amazing things in the financial world. PhonePe has entered into many partnerships to reach the position where it is today. Some notable partnerships include:

In 2018, the company partnered with giants like Jio Money and Airtel Money. As a result, users could link their PhonePe accounts with these platforms.

PhonePe is a proud partner of more than 180 consumer brands, including RedBus, Ola, Swiggy, Myntra, Goibibo and OYO.

Then, PhonePe entered into the market of mutual funds by collaborating with Aditya Birla Sun Life Mutual Funds. The partnership implied that PhonePe users could invest in mutual funds and make decent savings for the future.

PhonePe launched its international travel insurance in collaboration with Bajaj Allianz General Insurance. This happened in January 2020, and with this PhonePe became the first digital payment platform in the nation to do so.

PhonePe ATM

PhonePe added another feather to its cap in early 2020 with the launch of PhonePe Atm. Don’t be confused – it isn’t the ordinary bank atm that you visit to withdraw cash. Rather, through this service you can get instant cash from nearby merchants/shops offering this facility. The service is presently only available in the Delhi-NCR region, and will be extended to other states in a progressive manner.

Here’s how you can avail cash through PhonePe ATM:

• Click on the ‘Stores’ Tab at the bottom of your PhonePe app’s screen
• Select ‘PhonePe ATM’ to see a list of nearby shops offering the PhonePe ATM service.
• As of now, you can avail a cash of INR 1000 a day from the merchant.
• Visit the shop, click on the ‘withdraw’ option and transfer the required amount to the merchant.
• That’s it! The merchant will provide you the cash equal to the amount transferred.

PhonePe Competitors

PhonePe faces direct, very strong competition from a number of similar players in the market. Here we have listed the companies/brands that offer direct competition to PhonePe:

1) Paytm

Paytm is another digital wallet and UPI-based platform that is PhonePe’s major rival. Paytm was launched in the year 2010, and since then it has grown by leaps and bounds. Paytm and PhonePe are quite similar when it comes to the services offered. However, an aspect where the former beats the latter is the Paytm Mall.

2) Google Pay

Another arch rival of PhonePe in the UPI transactions segment is none other than the search engine giant’s Google Pay. However, recent reports suggest that PhonePe is ahead of GPay in terms of UPI transactions. For instance, in December 2020, PhonePe had a market share of 45.27% as compared to Google Pay’s 34.67%.

The major competition ends with these two. However, there are a few similar platforms as well which offer little competition. They include:

• Amazon Pay
• BharatPe
• BHIM
• Mobikwik
• Freecharge

We expect Amazon Pay to do well in this segment in the coming years.

PhonePe Marketing Strategy

Only recently, PhonePe earmarked INR 8,000 crore marketing budget to penetrate deeper into the country, whilst simultaneously taking on the rising competition. As part of the deal, the company signed two very popular Bollywood celebrities- Aamir Khan and Alia Bhatt for its endorsements. The company aims to add more than 100 million people every year till the goal of 500 million verified users is reached.

• The company relies heavily on TV, social media handles and YouTube channel to advertise new features and offers. With every TV commercial, PhonePe introduces a new tagline. Its present tagline is “Karte Ja, Badhte Ja”! The company has been actively pushing users to buy Gold on its platform.
• Phone Pe Awards and Recognitions
• Awarded as the best Mobile Payment Product or Service at the IAMAI India Digital Awards 2018.
• Bestowed with the SuperStartUp Asia Award in the same year.
• Declared the winner at the 8th Annual India Retail and e-Retail Awards 2019.
• Awarded as the best Mobile Payment Product or Service at the 2019 edition of IAMAI Digital Awards
• Earns a spot amongst Top 10 most trafficked platforms by Comscore
• Achieves the tag of India’s fastest growing insure-tech distributor with a sale of 5 lakh policies in 5 months.
• How PhonePe is using Machine Learning
• PhonePe is indeed making good use of artificial intelligence. Reportedly, PhonePe uses Hbase as primary Big Data Technology that enhances the user’s decision-making capabilities. This is despite the fact the most of the other companies use Hbase for offline jobs.
• PhonePe’s systems are highly efficient at integrating data-driven insights and user preferences. As a result, the machine learning model is an expert at personalizing reminders of payments (recharge, postpaid bill, utility bills) for every use. In an official statement, the company said, “We are using Machine Learning to drive increased conversion rates for both our users and partners.”

The Bottom Line

The digital payments and UPI transactions are rising every day, partly because of the ease of making payments without carrying cash and partly because of the habit demonetization has instilled in all of us. This is in fact a great sign for the economy of a nation. Developed countries do not rely on cash – and we too are perhaps moving in the same direction.

The landscape of online wallets has changed drastically over the last 10 years. Almost all services – bills, tickets, insurance, gold and online shopping – are just a few clicks away, as we can now access our bank accounts with utmost ease without having to travel physically to a bank or a store.

The digital war, however, is getting more intense with global names like Google and Amazon entering the market. This competition though has resulted in the availability of best offers for users.

The way PhonePe is moving ahead in the segment – we are sure that it will surely go a long way in shaping the digital revolution of the nation.