Flipkart grows digital payments business in India
India's largest online retailer, Flipkart, is investing $100m over the next three years to create its own digital-payments business, merging its own e-payments firm PhonePe with government-approved platform Unified Payments Interface (UPI). PhonePe will be available in the coming weeks on Flipkart sites Myntra and eKart, with other sites following "at some point in the future." Flipkart's gamble could be slowed down by the popularity of Cash on Delivery (COD), which in a survey taken during Q4 2015, was used by 83% of consumers "within the past six months."

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Flipkart, the largest online retailer in India, has announced plans to invest $100 million over the next three years to build out its own digital payments business, according to The Economic Times.

Flipkart will integrate the Unified Payments Interface (UPI), a government-approved payments platform, into its existing e-payments business, PhonePe. Flipkart acquired PhonePe, a digital payments startup, last April. Through the integration with the UPI, consumers will now be able to make online payments directly from their bank accounts, eliminating the need for a card or a netbanking service.

PhonePe is expected to be available within the coming weeks on Flipkart’s parent site Myntra, as well as on logistics provider eKart. Flipkart is planning to roll out the e-payments platform across its other digital sites at some point in the future. Flipkart CEO Binny Bansal has deemed the move a “long-term strategic bet,” and believes that “PhonePe could become as big as Flipkart one day.”

However, most online shoppers in India currently prefer to make payments through Cash on Delivery (COD), which could slow the growth of digital payments. In fact, 83% of consumers in India said they'd used COD for an online purchase “within the past six months” when surveyed in Q4 2015.

Flipkart’s move to invest in its digital payments platform comes as its two main competitors — Amazon India and Snapdeal — have bolstered their e-payments systems. Amazon India acquired Emvantage and has plans to expand its digital wallet, while Snapdeal owns Freecharge, which says it registers 1 million transactions per day.

Roughly 800 million people will have access to online payment options in India by 2019, as more consumers will be connected to the internet either through computers or mobile devices, notes The Economic Times. The market potential for the e-payments industry could be huge in India, but it's dependent on whether or not people begin to ditch their preference for COD payment.

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