Case Study: How PhonePe Beat Paytm in recent years

Overview of PhonePe and Its Services

PhonePe is a huge name in the Indian market today because of its extremely convenient services. PhonePe is one of the UPI-based payment platforms that made its official introduction to Indians back in the year 2015. The company has its headquarters in Bangalore and currently, the Chief Executive Officer of the company is Sameer Nigam who is also one of the founders of the digital payment application.

Even though the company made its presence in the year 2015, its UPI (unified payment interface) services did not go live until the year 2016. This less-than-a-decade-year-old company has grasped the Indian market and played against major competitive companies like Paytm and Google Pay. Now, the company earns a revenue of INR 690 crores.  

Talking about services of PhonePe then it was launched solely to offer UPI and digital payment services to the common people. However, as years went by PhonePe launched several services in its official platform which became the all-in-one application for its users. Apart from sending money by making transactions digitally, PhonePe launched mobile recharge services, paying bills, DTH recharges, payments at shops, investments in tax saving funds, insurance, gold and silver, and many more.

PhonePe Early Days & Dominance Of PayTm

PhonePe was founded back in December 2015 and by the year 2016, its UPI services went live for the common public in India. The company was started by Rahul Chari, Burzin Engineer, and Sameer Nigam (current CEO). It was in the year, 2016 when Flipkart acquired the company but soon after its acquisition, the founders of both companies stated that each of these companies will remain in its ownership.

Read More: How to get PhonePe Loan?

This meant that even though Flipkart had acquired PhonePe, Phonepe would be considered as an individual entity but Flipkart as their parent organization.

PhonePe started advertising and marketing its products and services on several platforms. The company approached Bollywood actor Aamir Khan to be their brand ambassador and he is and currently does some insurance advertisements on behalf of the company.

PhonePe made a huge impact on the number of users when they started their marketing campaign with Bollywood actors Aamir Khan and Alia Bhatt. These advertisements were created humorously and in the same way, highlighting the benefits of insurance renewals from their application. The advertisements also suggested that its insurance services offered the best benefits that were paperless and less hectic.

According to an article published in the Economic Times last year, it was revealed how PhonePe dominated the Indian market cutting out its competitors like a pro. PayTm and Google Pay were the two most active and the only competitor that PhonePe had ever since the beginning of their business journey. It would feel like a huge success for the company if they were able to beat such companies. PhonePe still is the leader when it comes to the value and volume of UPI transactions.

UPI transactions made last year only in August were reported at around 6.6 billion which was worth INR 10.73 trillion. It was data that was revealed by the NPCI (National Payments Corporation of India). PhonePe was the leader contributing the highest to this number and had a total growth of 47% only in August whereas other platforms like Google Pay and PayTm and Amazon Pay stood second, third, and fourth respectively.

How PhonePe Beat PayTm In Recent Years?

PhonePe now has many competitors in the Indian market. During its early days, PhonePe only had a few and PayTm was one among them. Now, the company has many because even Whatsapp has launched its payment application. Google Pay and Amazon Pay were the two companies that had a presence in the market way before PhonePe was launched in the year 2015.

However, these two companies could not gain much attraction from the Indian crowd. This is because most people that had used these apps faced difficulties making a transaction. After all, transactions used to fail.

PayTm was launched with the same purpose as PhonePe and immediately gained the market. But, the top-notch services offered by PhonePe with the instant transaction and attractive rewards just became ahead of PayTm. The number of transactions for each of these companies suggests how easily PhonePe beat PayTm. It was during the pandemic when digital applications emerged and had huge business. People started using these applications to make transactions easy and as well as safe.

In recent years, PhonePe has become the leader when it comes to both value and volume of transactions. This could be primarily because PhonePe heavily invests in its marketing and advertising campaign. The company has got two reputed Bollywood actors as its brand ambassador and has got Walmart as its parent organization in the country. PhonPe’s services were both fast and secure at the same time which is why most users shifted from one UPI app to another.

PhonePe also offered miscellaneous services like insurance, investment opportunities, and many more with just a few clicks. While other payment apps were struggling to retain their users, PhonePe made advancements to new services.

PhonePe vs PayTm Active Users In 2023 & Company Valuation

According to some reports made last month, it is still PhonePe that is taking the lead when it comes to the number of users and transactions made when compared to PayTm. NPCI once again revealed an official report stating the number of transactions made by each UPI company only in January 2023. PhonePe had processed a total transaction of 3,802.67 crores whereas PayTm processed only around 1.39 lakh crore.

Earlier last month, the Head of Consumer Platform and Payments, Sonika Chandra said that the company proudly boasts to cross the 350 million users mark. The number was huge, especially in a country like India where most people still do not own a smartphone. PayTm, on the other hand, still did not reveal the total number of users this year but according to some reports from the year 2021, the company had 330 million users.

PhonePe being less than a decade-year-old company made a huge impact by attracting a large number of customers. This helped the company grow its company valuation which currently stands at $12 billion. However, even though the company has not assigned its name for the funding round but has said that its company was valued at $12 billion. PayTm, on the other hand, has a market capitalization of $4.65 billion according to some reports made in Feb 2023. This number has made PayTm the 2549th most valuable company.

How PhonePe Is Different Than PayTm and Google Pay?

PhonePe offers the best user interface to its users. The user interface has been kept simple and easy which proves to be a much more convenient option than other merchants like PayTm or Google Pay. There is a massive difference between these three merchants as they have got variations in their service quality. While PayTm offers magnificent rewards on every transaction and offers a wide range of services like Fastag and many more. PhonePe offers the best transaction services which prove to be both fast and safe.

Google Pay also has an interface that is quite easy and simple for its users. But, Google Pay’s transactions sometimes fail and it becomes quite inconvenient for the customers. PhonePe marks itself as unique among the other two because of its top-notch services and also for its all-in-one facility. PayTm, on the other hand, does offer similar thing but do not have a service quality as better as PhonePe.

These are some of the differences between PhonePe, Paytm, and Google Pay. The final verdict is easy to say that PhonePe is much bigger when it comes to its UPI market share and customer app usage metrics.

Revenue Model

Just like any other online platform the company earns its revenues from the promotion of various types of products in its application. However, the company earns some commission whenever recharges are done through its platform.

A certain commission is earned by the company for every recharge that gets done from its application. Looking at the number of users that the application has the majority of the revenue earned by the company is through commission.

It is also one of the first digital payment applications that announced processing fees whenever a user uses their credit card or something like that. Slice users when they make a certain payment from this application has to pay certain extra money for the transaction that they make.

All in all, the revenue model of PhonePe, is something that is all about the commission. Due to its huge number of users, the company’s revenues had made a whopping amount of INR 1912 crore in the first nine months of the previous year. this number suggests that users of this platform are satisfied with its products and services.

Conclusion 

PhonePe is one of the leading companies when it comes to digital payment applications in India. Even though the company has been acquired by Walmart, the company has never compromised when it comes to quality of service. Customers do not want their transactions to fail and this is where PhonePe has done an excellent job. Looking at the numbers, PhonePe is looking strong to take over the Indian market.