PhonePe allows users to link their bank accounts securely to their smartphone using National Payments Corporation of India’s encrypted libraries. Once linked, users can authorize money transfers or merchant payments instantly by simply entering their 4-6 digit MPIN, a personal code.
Money is instantly transferred directly from the sender’s bank account to the recipient’s bank account. There’s no need to enter one time password to authorize a transaction.
PhonePe, started by former Flipkart senior executives Sameer Nigam and Rahul Chari, is expected to a key role in former’s payment business strategy. Flipkart had acquired PhonePe for an undisclosed sum in April.
Following this launch, Flipkart’s wallet service Flipkart Money and Myntra’s cashback service ‘My Cashback’ will be converted into PhonePe wallet.
“Existing digital payment solutions such as netbanking, debit cards and digital wallets force Indian consumers to choose between a highly secure or an easy payment experience. PhonePe offers an experience that is both 100per cent secure and lightning fast to use. And the best part is that now a consumer’s money will always stay in their bank account – until they spend it,” CEO, PhonePe, Sameer Nigam said.
While digital wallet providers such as Paytm, MobiKwik and Freecharge (owned by Snapdeal) have built large businesses in mobile recharge, cable and electricity bill payments, a majority of e-commerce transactions and offline transactions still happen via cash.
“UPI is a watershed moment in the digital payments industry, not just in India but worldwide. I’m thrilled that PhonePe and YES Bank are working together closely to spearhead the digital payments revolution in India,” Group CEO and Co-founder, Flipkart, Binny Bansal said.
If PhonePe works out as planned, it may help Flipkart slash the number of cash transactions, lower costs and make its supply chain more efficient.
PhonePe app users can send or request money to friends and family, without knowing the bank account details of the beneficiary.
The app also offers bill-split, mobile recharge and utility bill payment features. It will also allow the 75 million registered customers of Flipkart, Myntra and Jabong to pay for their online shopping using PhonePe.