PhonePe

Your one stop shop for everything money

Online Payments Industry in India
UPI Features

Unified Payments Interface ● Peer to Peer money

(UPI) is a system that transfer.
powers multiple bank ● Peer to Merchant
accounts into a single
Payments.
mobile application merging
● Instant
several banking features,
seamless fund routing & transactions.
merchant payments into one ● No minimum
hood. transfer.
Market leaders (Dec’22 data)

Phonepe Google Pay Paytm

Volume: 3,67.424Cr Volume: 1,05.405 Cr Volume: 2,71.234Cr

Value: 639,348.78Cr Value: 118,069.81Cr

Value: 440,370.99Cr
 App Wise UPI
Transaction Count
<–

App Wise UPI

Transaction Value →
Google Pay or GPay
Product Vision:
Google Pay is the simplest way to send money home to your family, recharge your
mobile, or pay the neighbourhood chaiwala.
Mostly a P2P and P2M transaction provider which offers utility bill payments as well.

Key differentiators:
● Easy to use intuitive and clutter free user interface.(Key factor why it is used a
lot by users in the age group 18-23 and above 49, as it delivers what they need
without bombarding them with a bunch of other features.)
●
● No in-app wallet.
● No wealth management system (SIPs, gold or equity trading).
Paytm
Product Vision:
To bring 500 million unserved and underserved Indians to the mainstream economy
ALl in one payments app with wealth management (SIPs, Gold, equity), as well as utility bill
payments, ticket booking, etc..

Key differentiators:
● Offers a basic Spend analyser which is missing across all competitors. But it’s
very primitive and only offers services for transactions made via Paytm Wallet.
● Offers Digilocker which facilitate usage of wealth management services.
● Post-Paid services also available.
Cred
Product Vision:
Pay your credit card bills and earn rewards.

Usage: [Dec’22]
Count: 3.142 Cr Value: 19622 Cr

USP:
While CRED’s contribution to the number of transactions remains low, it is quite high in volume. This
showcases that the company has been consistently recording a higher average payment volume (this
month, it is INR 12,886)

Key differentiators:
● Offers the best reward bonuses for Credit card bill payments.
● Gamified approach to keep users engaged which results in users buying from CRED marketplace with
their earned reward points.
● Offers products that can be bought using Cred points. Major attraction.
● Interactive app because of jackpot rolls and games. (Gamification)
Indirect Competitors
lazyPay
Pay later.

USP:
Gaining prominence fast as it decreases the hassle of verification and payment and replaces it with a
single click.
 Sample User Personas

Nam Age Location Employmen Key Use Cases Frustrations Key

e t status takeaways for
PhonePe

Mohi 28 Bengalur Software ● Paying credit card bills. ● Has to use Cred for better deals ● Need to work
● Paying utility bills. on credit card payments. on offering
t u developer ● Needs multiple apps for better deals
● Keeping track of online spend.
● Ordering food. payments. for credit card
payments

Rash 40 Nagpur Tuition ● Receives fees from students. ● Would prefer a lite version of the ● Maybe a lite
● Orders groceries from partner apps. app for her son which could version of the
mi Teacher, ● Pays pocket money to her 12 yr old send spend results to her app that
Mother son on app as she doesn’t trust him account. targets such a
(Relevant to with physical money. use case.
● More tie ups
use case)
with grocery
partners to
attract users.

Man 63 Jaipur Recently ● Likes to buy most things online. ● Gets bogged down by the UI ● Clean UI
● Loves to pass time playing games on needed.
gesh retired govt. mobile.
servant ● Gets enticed by games that reward
while making payments.
Key Target Group 1

Ages [24-49]
Working population
~50 Cr
Key usage/motivations on Payment apps:
● Mobile recharge, bill payments, insurance buyers, credit card bills.
● Paying for Food/retail shops or while going out.
● Need to be rewarded for sticking to phonepe for multiple use cases.
● The ideal user as it generates the most revenue.
Key Target Group 2

Ages [18–23]
College students
~15 Cr (Growing at ~2% YoY)

Key usage/motivations on Payment apps:

● Mobile recharge.
● Paying for Food/retail shops or while going
out.
● Would love to earn reward points/discounts
which can be used directly for food or
shopping.
● Future credit card bill
payers/insurance,movie tickets buyers.
● Great to onboard them early and turn into
potential high value customers later on.
 Key environmental factors
Factors Gpay PhonePe Paytm Cred

Technological 93Cr smartphone users 93Cr smartphone users 93Cr smartphone ~7 Cr credit cards
in India. Great in India. Great users in India. Great active in India.
opportunity. Predicted opportunity. Predicted opportunity. (Atleast 3 Cr unique
to reach 140 cr by to reach 140 cr by Predicted to reach users). Growing
2028. 2028. 140 cr by 2028. rapidly, it’s a great
market to capture.

Socio-cultural Became mainstream Became mainstream Became mainstream

after demonitization after demonitization after demonitization
and lockdown. and lockdown. and lockdown.

Demographic Adopted by 18-49 age Adopted by 18-49 age Adopted by 18-49 Low usage among
groups readily. groups readily. age groups readily. Tier-2 and 3 users.
 Key environmental factors
Factors Gpay PhonePe Paytm Cred

Political Got funded by

Tencent(Chinese Tech
Giant) recently, which
could bring some wrath
from citizens.

Government NPCI planned to cap NPCI planned to cap Sitting at ~16%, it’s
regulations the market share of the market share of a setback for Paytm
individual UPI appsto individual UPI appsto that the deadline has
30% but has extended 30% but has extended been extended.
the deadline to Dec the deadline to Dec It could have
2024. 2024. benefitted hugely
Sitting at ~33%, Gpay’s Sitting at ~49%, being the No 3, it
expansion plans might PhonePe would need was bound to gain
suffer. to pivot the revenue the most from the
stream to avoid losses. move.
 The USP[1] As PhonePe becomes an All-in-one
app for all things money, it would be
(Unique Selling a great add on for it to have an
EXPENSE ANALYTICS
Proposition) DASHBOARD.
● Insurance premiums, SIPs, Utility Bills, Credit Card Payments, Mobile
Recharges, Online retail are all features that PhonePe offers. Currently users
are distributed across many competitor apps for these use cases.

● While PhonePe has the largest user base for P2P and P2M transactions, it lags
behind Cred for Credit Card payments. It is imperative the PhonePe leverage its
dominant position in the market by introducing an Expense Tracker and
Analytics tool.

● It would help bring more customer across Use Cases because of the quality of
the analytics dashboard.

● Payments distributed over multiple apps wouldn’t be readily available to

PhonePe, hence, it would incentivise the user to do it all under PhonePe to
make sure the state-of the art tracker can effectively provide usage stats,
expense reports and alert the user for overspending.
 While PhonePe has become a one
stop shop for everything online, it is
The USP[2] critical to make sure it remains
clutter free when it comes to the
(Unique Selling usage by the end user, hence I
propose a See what you use app UI
Proposition) for users (including myself) who get
turned off by the all encompassing
home page.
 ● Users choose from a list of
features that the app has to offer
and only see those modules
All-in-one but ●
when they open the app.
Payments, Insurance, Travel

you decide what bookings, Entertainment, Bill

Payments, Wealth management,

you choose to Retail (Groceries, etc) could be

some of the modules users can
select multiple options from.
view. ● As the user selects one or more
modules, the next time they open
the app, they can easily access
these features.
● An easy to use UI makes for a improved user experience.
● A user (18-23) & (49 and above) which uses the app just for merchant
payments and doesn’t own a vehicle or has bills to pay need not open an
app filled with possible use cases that they don’t need.
● A clutter free environment could help improve feature discovery based on
the current features that the user chooses to see.
● E.g. PhonePe offers a Bill Splitting option that is not readily visible in its
interface that is gearing towards and promoting wealth management and
credit card bills that it hinders feature discovery.
● Another major advantage is it reduces the number of clicks for a particular
use case, which in turn is a key metric when it comes to user conversion
(defined here as a user coming to the app for a task and actually ending up
doing it).
● In keeping with the company’s large list of offered features, we can do a
Featured section to make sure the users are aware of what the app has to
offer and a reward system every time the user make use of a feature in a
new module.
●
● This way we could increase user’s awareness about the features offered
while making it a choice rather than imposition.
User Acquisition
Targeting the 24-49 age group among tier-2 and 3 as the opportunity is
wide open on that front.
Partner Tie-ups
Partnering up with say Insurance companies where-in we promote them while
they mention us in their promotional strategies can be a win-win for both.
Similarly, partnering with Banks to offer loans from their banks while paying
installments with PhonePe could help garner enough visibility to generate a
solid first set of users.

Utilising the Payments ecosystems

Customers will derive value from the payment ecosystem of PhonePe through
which they could schedule annual/monthly payment deductions (Mandates) and
never forget to pay their bills, be it electricity or insurance.
The above feature could stand out while advertising for the app as it gives us
leverage over traditional Insurance sellers and offline bill payments.
User Acquisition
● Onboarding more retail merchants.

Tier-2 and Tier-3 cities

Solving for low adoption rates for new technology
● Running Targeted Ads on social media by nano influencers which
target specific groups. Increases user awareness for new features
such as motor insurances and bill payments in tier-2 and 3 cities
which have a general distrust for technology and lower adoption
rates.
● Tying up with vehicle retail stores to gain commission by directing
the customers to buy insurances form PhonePe, hence gaining
trust by association.
● Since a lot of vehicles in rural India run without insurance, it would
work to make people aware of how much they stand to gain from
a simple insurance premium in case of a road accident and how it
is the cheaper choice. (VIRALITY)(Make insurance cool!)
 Business Model Canvas

Key problems Key Solutions Value Propositions Customer Customer Segments

● Hasell free Secure money ● Best offers relationships
recharges/bill transfers and bill with the best Provide the best 23-49 yr olds who do
payments. payments partners make customer feedback most purchases
● Purchase of it a win win for and redressal online.
insurance, retailers as channel. Bussing users 17-22
loans. well as which will enter the
● P2P & P2M Key Metrics customers. Channels above target user
money ● Transactions ● Compare and ● Discounts group soon enough.
transfer. per day. contrast deals ● Rewards
● Share of utility which is too ● Promotion by
bills paid on cumbersome nano
app;. to be done influencers.
offline.

Cost Structures Revenue Streams

Cost of partnering with brands and offering ● Usage fees (Transaction charges for bill payments).
discounts till fixed costs are compensated ● Commission (for products like insurance).
by margins. ● Brokerage (for Gold, SIPs, equity).
Revenue
Key Contributors:
● Commission on insurance premiums.
● Transaction charges on Utility bill payments.
● Transaction charges on recharges.
Revenue
Insurance premiums
PhonePe claimed to have sold 1mn two wheeler insurances
by July 2022. Estimating 1mn lacs more sold in one year and
an average premium of 800Rs per annum.(~12%
commission on average)
800*0.12*20 lacs\
=1980lacs
~20 Cr

Mobile recharges
100Cr smartphone users, 60% online recharge, 40% of that
via PhonePe)
Rs. 2 per recharge above rs 50.
Estimated annual recharges above 50 Rs = 100*0.60*0.40Cr
=24Cr
24*2 - 48Cr
Revenue
Other utility bills
Rs 5 per transaction.
Estimated 10 Cr transactions.
5*10
=50Cr

Total = 50+48+20
=118Cr.

Note: While there will be stiff competition when it comes to paying for
mobile recharges, transaction fees on insurance and other utility bills will
be levied by most apps in the future and will be the new norm. Hence,
PhonePe should focus on such avenues instead of losing customers by
charging on cheaper use cases like mobile recharges.