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PhonePe, one of India’s largest fintechs, has announced that it will become the first platform to support cross-border payments made via India’s Unified Payments Interface (UPI).
The new feature, known as UPI International, will allow PhonePe’s Indian users to pay foreign merchants using UPI, India’s instant payments system, when travelling abroad.
At first, UPI International will support payments to all merchants in the United Arab Emirates, Singapore, Nepal and Bhutan that use a local QR code.
With UPI International, PhonePe users will be able to make payments in foreign currency directly from their Indian bank, similar to using an international debit card.
Rahul Chari, co-founder and chief technology officer at PhonePe, said UPI International is designed to facilitate “safe and easy” transactions for the millions of Indians who travel overseas.
“Over the past six years, all over India, we have been lucky to experience the UPI payments revolution transforming our daily lives,” he said.
“UPI International is the first major step in letting the rest of the world experience UPI too.
“I am sure this launch will prove to be a game-changer and will completely transform the way Indians travelling overseas pay at merchant outlets abroad.”
PhonePe valuation rises
The launch of UPI International follows a major valuation and funding raise by PhonePe that was completed last month.
In mid-January, PhonePe announced that it had been valued at $12bn, and had raised $350m in funding from General Atlantic, a US-based growth equity firm.
The funding is expected to enable the “next wave of growth” for UPI, including “significant investments” in infrastructure and the development of new data centres. PhonePe will also work towards integrating UPI into credit provision in India.
Writing for India’s Business Today, Chari said that although the country’s digital financial infrastructure has expanded significantly, access to credit remains poor for both individuals and businesses.
Going forward, however, PhonePe plans to begin leveraging UPI data to allow Indian citizens to build universal and trustworthy digital credit histories.
“These digital histories, along with data from bank statements to Goods and Services Tax Network (GSTN) records, will be accessible and shareable to any credit provider via the Account Aggregator framework,” he said, referring to a Reserve Bank of India (RBI) scheme.
“This will make the credit underwriting process stronger for the credit provider and frictionless for the borrower.”
PhonePe, Flipkart part ways
In addition to its valuation and funding raise, PhonePe has announced that it has fully separated from Flipkart, its previous owner and India’s largest e-commerce platform.
In a submission to the US Securities and Exchange Commission (SEC), Walmart, the majority shareholder of both Flipkart and PhonePe, wrote that the separation will allow both companies to “chart their own growth plans”.
Additionally, the separation is expected to create new opportunities for investors to gain more targeted exposure to India’s fintech sector.
As part of the transaction, existing Flipkart Singapore and PhonePe Singapore shareholders, led by Walmart, have purchased shares directly in PhonePe India.
This completes the move to make PhonePe a fully India-domiciled company, a process that began earlier in 2022.
Since being acquired by Flipkart Group in 2016, PhonePe’s registered user base has grown to more than 400m, meaning that more than one in four Indians are now using PhonePe.
During that time, PhonePe has also digitised more than 35m offline merchants located across 99 percent of Indian pin (area) codes.
In terms of UPI coverage, PhonePe remains the most common way for Indians to spend.
In December 2022, 50.2 percent of UPI transactions were initiated via PhonePe, followed by Google Pay with 34 percent and Paytm with 9 percent.
In 2018, Walmart acquired Flipkart Group in a $16bn deal, making it the largest ever acquisition in India's web services sector.
