Mini project on – “Fintech-PhonePe Payment Revolution”

Submitted for the partial fulfilment of the requirement for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY:
SUBMITTED TO:
Name: Himanshu Raj
Dr. Siddharth Mishra
Enrolment No.: 2023104023
(Assistant Professor)
MBA 1st First Year

SHRI RAM MURTI SMARAK

INTERNATIONAL BUSINESS SCHOOL,
LUCKNOW

(Affiliated to Dr. A.P.J. Abdul kalam Technical University, Lucknow)

1
 CERTIFICATE

This is to certify that Mr. Himanshu Raj (Enrolment Number is 2023104023 a regular student
of MBA 1st year and has completed his mini project entitled “Fintech - PhonePe Payment
Revolution”, for partial fulfillment of the curriculum for the award of the degree of Master of
Business Administration from Dr. A.P.J Abdul Kalam Technical University, Lucknow, is orig-
inal work done by him.

Signature of Faculty

Date:

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 STUDENT DECLARATION

I, HIMANSHU RAJ, am enrolled as a student of MBA in Shri Ram Murti Smarak, International
Business School, Lucknow (affiliated to Dr, A.P.J. Abdul Kalam Technical University, Lucknow). I
solemnly declare that the project title “Fintech - PhonePe Payment Revolution” is original
research work carried out by me and the same has not been submitted in any form partially or
fully for the award of any degree or diploma of this and any other University/Institute.

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 ACKNOWLEDGEMENT

I extend my deepest gratitude to Dr. Siddharth Mishra, my faculty mentor and supervisor, for
leveraging her extensive experience and knowledge in guiding the research on “Fintech -
PhonePe Payment Revolution” His continuous support in identifying the most relevant and
practical topic has enabled me to enrich my knowledge. I view this opportunity as a significant
milestone in my career development. I am committed to applying the acquired skills and
knowledge effectively, striving for continuous improvement to achieve my career objectives. I
look forward to future collaborations with like-minded individuals. As we conclude our pro-
fessional course journey, this project will further enhance the value of my professional life.
The research emphasizes the current market scenario, refining my understanding of issues
faced by the general public. I am dedicated to gaining valuable insights that will enrich my
knowledge and specialization.

Thank you Himanshu Raj

MBA 1st Year

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 CONTENTS

S.no Chapters Pg.no

1 Introduction to study 6-7
2 Research Methodology 8
3 Literature Review 9-16
4 Introduction To Phonepe 17-21
5 PhonePe Business Model 22-27
6 PhonePe Marketing strategy 28
7 Data Analysis & Interpretation 29-40
8 Conclusion 41
9 Future Scope & Plans 42
Reference 43

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 CHAPTER – 1

INTRODUCTION TO STUDY

PhonePe is an Indian e-commerce payment system and digital wallet company headquartered
in Bangalore, India. It was founded in December 2015, by Sameer Nigam and Rahul Chari.
PhonePe app went live in August 2016 and was the first payment app built on Unified Pay-
ments Interface (UPI).

The PhonePe app is available in over 11 Indian languages. Using PhonePe, users can send and
receive money, DTH recharge mobile, and data cards, and make utility payments. buy gold and
shop online and offline. In addition, PhonePe also allows users to book Ola rides, pay for Red-
bus tickets, order food on Freshumenu and Fit, and avail of Goibibo Flight and Hotel services
through microapps on its platform.

PhonePe is accepted as a payment option across 5 million offline and online merchant outlets
covering food, travel, groceries, movie tickets, etc. The app crossed the 100 million user mark
in June 2018 and also crossed 5 billion transactions in December 2019.

It is licensed by the Reserve Bank of India for the issuance and operation of a Semi Closed
Prepaid Payment system. Digital transactions are defined as transactions in which the customer
authorizes the transfer of money through electronic means, and the funds flow directly from
one account to another. These accounts could be held in banks, or with entities/ providers.
These transfers could be done through means of cards (debit/credit), mobile wallets, mobile
apps, net banking, Electronic Clearing Service (ECS), National Electronic Fund Transfer
(NEFT), Immediate Payment Service (IMPS), PhonePe paid instruments or other similar
means.

The Union Cabinet has given its approval for the introduction of steps for the promotion of
payments through cards and digital means. The move aims at reducing cash transactions. Sev-
eral short-term (to be implemented within one year) and medium-term measures (to be imple-
mented within two years) have been approved for implementation by the Government Minis-
tries/ Departments/ Organisations.

The Guidelines are as follows.

Since the dawn of history, there has been trading between two parties exchanging goods
PhonePe. Eventually, such trading became complicated and inconvenient, money was invented
so that a buyer could acquire something he needed from a seller without necessarily exchanging
goods. Security of the monetary systems was guaranteed by the local, regional, national, and
eventually international banks controlling the printing of money. Over time, new ways of pay-
ment such as payment orders, cheques, and later were invented. These allow payment without

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actual money. Mapping between the payment instrument and real money is still guaranteed by
banks through secure financial clearing networks.

Eventually, remote payment became possible using those same instruments, although security
then started to become a challenge. Verifying a hand-written signature on a cheque or a credit
card mail order is impossible when the buyer and seller are not in PhonePe, in this case, the
buyer must take the additional risk of sending in a payment before having received his purchase
or the seller must send the purchased items before having received the payment. Phone order
purchases are riskier since no signature at all can be provided, the seller runs the risk that the
buyer may deny having made the purchase and demand a refund even after he has received the
goods. Recently, there has been a great deal of interest in facilitating commercial transactions
over open computer networks, such as the Internet. The introduction of open networks renders
the security issues even more critical. Then, without new security measures, envisioning elec-
tronic commerce over open computer networks is a topic. In this article, I attempt to provide
an overview of electronic payment systems focusing on issues related to their security.

Objectives Of the Project

• Improve the case of conducting card/digital transactions for an individual.

• Reduce the risks and costs of handling cash at the individual level.
• Reduce costs of managing cash in the economy.
• Build a transaction history to enable improved credit access and financial inclusion.
• Reduce tax avoidance.
• Reduce the impact of counterfeit money.

Scope of The Study

• Provide access to financial payment services to every citizen along with the ability to
conduct card/digital transactions.
• Digitalize Government collections by equipping each collection point with a method
to accept card/digital payments.
• Migrate payment transactions from cash-dominated to non-cash through incentiviza-
tion of card digital transactions and disincentivization of cash-based transactions.
• Enhance acceptance infrastructure in the country to promote digital transactions.
• Encourage corporate, institutions, and merchant, establishments to facilitate card/dig-
ital payments.

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 CHAPTER – 2

RESEARCH METHODOLOGY

This study has been carried out on the PhonePe Payment System. Data used in this study
was collected basically from the secondary sources. Primary data is also collected through
a personal interview method conducted by the person who is supposed to know about the
topic. Secondary data have been collected from various sources including websites, news-
papers, various published and unpublished articles about PhonePe primary education, etc.

Survey Instrument

A questionnaire was sent to the person concerned with the request to answer the questions
and return the questionnaire. The questionnaire is sent to the respondent who is expected to
read and understand the question and write down the reply in the space meant for the ques-
tionnaire itself. A questionnaire consists of several questions printed or typed in a definite
order on a form or set of forms. The respondent to have answered the questions on their
own. Objective-type questions have been designed in the survey Some responses have been
collected from people. The result of the survey is shown in graphs. The questionnaire de-
signed for the PhonePe Payment System has Five points Agree, Disagree, strongly disa-
gree, strongly agree, Neutral.

Data Collection

The data collected were analysed for the entire sample.

Result

This is descriptive research that has studied the present conditions. The relevant data was
collected based on the PhonePe system and which PhonePe payment type of most suitable.

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 CHAPTER – 3

LITERATURE REVIEW

Many empirical studies have been conducted on the subject of “Plastic Money” in India and
abroad. The major emphasis of research has been on various issues like fraud, security, usage
patterns, new methods of PhonePe, etc. The previous work done on plastic money needs pe-
rusal. It has been reviewed to indicate in a general way the type of work done on this subject
in India. It is expected that the critical examination of the studies would give focus to our
problem and help to indicate the areas that have remained neglected at the hands of the re-
searchers. From the review of the literature, it was found that hardly there was a study that
examined the perception of both users and traders on the usage of plastic money. Also, many
studies concentrated on individual cards, for instance, credit or debit cards, and neglected the
joint effect and new innovative cards like smart cards, charge cards, and check cards. In this
study, an attempt is made to include all types of cards in the analysis.

Plouri, Yandenbosch, and Hulland (2000), in “Why Smart Cards Have Failed to Look
to Consumers and Merchant Reactions to a New Payment Technology” describe that for
more than a decade, bankers and other outside financial services community such as hardware
manufacturers have sought to solidify the place of smart card technology as a viable retail
point-of-sale alternative and, more boldly, as an outright replacement for cash in everyday
consumption situations around the globe. Despite strong development efforts and numerous
fact-finding market trials, many banks have found smart card technology to be a losing prop-
osition. This article presents a detailed case study of both consumer and merchant adoption
of one smart card-based retail point-of-sale system. The system called "Exact", was test-
marketed for a full year in the Canadian market. Various perceptual and demographic data
from consumers as well as firm-level data from retailers are both presented and assessed. The
ensuing discussion offers pragmatic suggestions for those in the financial services commu-
nity as to how the apparent difficulties and shortcomings of smart card technology may be
overcome.

Steindl (2000), “Credit Cards, Economization of Money, and Interest Rates.” shows the
effect of interest rates on the rise of credit cards, which are increasingly used to finance con-
sumption. The corollary is a reduction in money demand, which reduces the interest rates
Greater credit card usage increases the demand for credit, which raises the interest rate. Three
models employing a credit market are used to resolve the problem. The principal result is that
each establishes that the interest rate must rise. An additional implication is the counterintu-
itive result that credit does not simply substitute for money in financing expenditure, rather
increased credit card use must result in increased consumption expenditure.

Warwick and Mansfield (2000), “Credit card consumer college students’ knowledge
and attitude.” Given the proliferation of the credit card industry in today's US household,

9
and the aggressive promotional tactics employed to get college students to sign on as cus-
tomers. This exploratory study takes a look at the credit card activity of college students at
the Midwestern campus. The majority of students surveyed did not report knowledge of their
credit card interest rate. Students appear to have a realistic attitude toward using credit cards,
although not knowledgeable about the details of their cards This study raises the question of
whether universities and business schools are doing a better job of preparing their students
to be knowledgeable consumers in the marketplace or not.

Leung and Lai (2001) “Improving the quality of the credit authorization processes a
quantitative approach.” This paper proposes that the quality of a company's authorization
system should be measured by two major considerations. First, the system should enhance
the quality of customer service by reducing the waiting time at the point of sale. Second, it
should reduce the risk of accepting transactions of credit. In this paper, a major credit card
company is used to demonstrate how the credit authorization process can be improved using
a quantitative approach. Opportunities for quality improvement were first identified through
brainstorming sessions with top management, by using quality improvement tools. A queuing
model was then used to redesign the authorization process. Finally, a simulation model was
used to test and evaluate the new process design. As a result of these improvements, it was
determined that more than US$2.5 million were saved annually and authorization efficiency
was improved by more than 40 percent.

Azhagaiah (2002) “Credit creation through plastic money.” This paper focuses on the
issues of credit card usage among consumers. It exhibits the recent development, evaluates
the present status, and assesses the future of the consumer's indebtedness by credit card debt.
It also discusses the financial position of the banking sector in India. Strategies used by the
banks to meet competition in credit/debit cards are also discussed. Credit to individuals and
households has a vital role to play in creating a bank's credit and money supply. The author
points out that the role of credit cards in the money market, in the years to come, will be very
bright. There is no doubt, that the banks that concentrate more on credit cards will get more
benefits from using credit creation.

Lee, Jinkook (2002) “Consumers Use of Credit Cards: Store Credit Card Usage as an
Alternative Payment and Financing Medium” asserts consumers' use of store-issued credit
cards with particular attention to their function as an alternative payment and financing me-
dium. Using a 1998 survey of consumer finances data, the researchers found that credit avail-
ability through bank cards is negatively correlated with consumer use of store cards as a
financing medium, suggesting the role of store cards as a supplementary credit line. A nega-
tive relationship is also found to exist between consumers' bank card usage and their use of
store cards for transaction purposes, indicating that store cards function as a substitute pay-
ment medium. Consumer's usage of store cards varies according to function and is related to
several variables including the use of bank cards, credit history, attitude towards credit, in-
come, education, and ethnicity.

Chakravoni's (2003) “Theory of credit card networks: A survey of the literature.” shows

10
that credit cards provide benefits to customers and merchants not provided by other payment
instruments as evidenced by their explosive growth in the number and value of transactions
over the last 20 years. Recently, credit card networks have come under scrutiny from regula-
tors and antitrust authorities around the world. The cost and benefits of credit cards to net-
work participants are discussed. Focusing on interrelated bilateral transactions several theo-
retical models, have been constructed to study the implications of several business practices
of credit card networks.

Gupta's (2003) “Legal and regulatory framework of credit cards” asserts that the regu-
lations of credit card business in India are diffused and need to be streamlined. Whereas in
developed countries the law on credit card business is comprehensive and straightforward,
its Indian version requires a structural change. Hence, there is a need to explore the various
legislative premises of the inferior and unclear Indian version for the protection of the interest
of cardholders and the healthy growth of the industry.

Bandyopadhyay (2004) in his article “Credit Cards Look for an Ace” put light on various
issues, major card players are issuing cards without much checking credentials. It adds to
nonperforming assets [NPA] levels in its portfolio but overall, about 0.6 percent of personal
consumption expenditure in India is through credit cards. He suggested that (I) the increasing
card use could be by making all utility payments through cards by installing more electronic
draft capture (II) the government can do by waiving the tax on credit cards which is a big
disincentive for card users (III) to bring down the default rate, the bank must set up a credit
bureau. This will enable banks to detect the first sign of default in advance and sound a red
alert so that prospective defaulters can be weeded out.

Bhargava's (2004) title “Debit cards: A new generation plastic money” analyses that debit
cards are fast catching up with customers. A combination of factors like case of availability,
debit-averse profile of customers, and zero interest rates are propelling the usage of Debit
Cards. The study emphasizes to increase the usage of these cards, the bank will need to im-
prove infrastructure and continue to focus on increasing installations of point of sale (POS)
in smaller cities and on the locations that are frequently used by cardholders, and t o develop
new marketing programmers that educate customers on the benefits of replacing cash with
plastic.

Braunsberger (2004) “The effectiveness of credit card regulations for vulnerable con-
sumers.” The study investigates how vulnerable consumers (i.e., College students) might
respond to the revised credit card disclosure requirement (i.e., amendments in the Truth in
Lending Act) and investigates the credit card knowledge of college students. The study ex-
amines external validity issues, that is, whether urban college students are more knowledge-
able about credit cards than rural students and whether adult populations are more knowl-
edgeable than student populations. This study further investigates the relationship between
objective and subjective knowledge and product usage. The result shows that consumers in
general are not very knowledgeable about credit cards.

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Cunningham (2004) “College Student credit card usage and the Need for on-campus
financial counseling and planning services.” The purpose of this study was to examine the
use of credit cards among college students and the need for on-campus financial counseling
and planning services. The research objective was twofold: (a) to determine if college stu-
dents are responsible with their credit cards and (b) to evaluate the need for on-campus fi-
nancial counseling Participants in the survey (N=110) completed a survey consisting of var-
ious questions about students" use of credit cards. Results showed that while a majority of
the students who completed the survey were very responsible with their credit cards, there
was a group (composed of study) who were having significant credit problems. The paper
concludes with suggestions regarding on-campus financial counseling services.

Easwar and Kumar (2004) assert in the studies titled, “Credit cards on a growth trajec-
tory” that the perception of owning credit cards has changed and they are viewed as being a
convenient substitute for carrying cash and also availing credit for short period. But in the
context of its home country, India ranks at the bottom in terms of usage of credit cards, when
compared to China, Taiwan, and Malaysia.

Goyal's (2004) “Role of supplementary services in the purchase of credit card services
in India.” describes that service products being intangible and experiential is different to
evaluate before purchase and consumption. Consumers perceive risk while purchasing ser-
vices and rely on various information sources to make a purchase decision. In services, per-
sonal sources of information and considered more than nonpersonal sources of information.
The present study focuses on understanding the significance of supplementary services as a
nonpersonal source of information for consumers for PhonePe evaluation of credit card ser-
vices. In other words, whether information regarding supplementary services can help con-
sumers make PhonePe evaluation of credit cards. In addition to PhonePe evaluation, the im-
pact of supplementary services is studied towards post-purchase evaluation credit card ser-
vices Supplementary services being a part of a full-service product offered by marketers can
be utilized as a beneficial tool to create interest and develop awareness among consumers.
Hilgert (2004), “Consumers resolution of credit card problems and exit behaviors.” Us-
ing data from the survey of consumers, this study focuses on consumers' resolution efforts
with credit card problems and the likelihood of "exiting"- that is discontinuing the use of a
given credit card or the financial institutions associated with the card. Among all households
with a problem, nearly two-thirds (63 percent) were able to resolve their problem, while over
half (55 percent) exited. Exist was associated with marital status, race, how dissatisfied the
consumer was, the number of problems related to credit cards, and attribution. Holding all
the else constant, consumers who were likely to resolve their problem were only half as likely
to exist. Thus, credit card companies need to carefully and quickly address their customer '
problems and resolve their complaints.

Humphrey (2004), in “Replacement of cash by cards in US consumer payments” Au-

thors uses over the past 25 years’ time series data. The results show that the share of cash in
consumer payments appears to have fallen from 0.31 in 1974 to 0.20 in 2000, cheques re-
placed cash during the 1970s, credit cards replaced some cheques during the 1980s, and debit

12
cards replaced both cash and cheques in the 1990s. The author feels that even though, cash
is not projected to go to zero anytime.

Prasad (2004), in “Product Innovation Suggestion from a Reader: KCC vs ATM” article
examined the utility of the Kisan credit card from the point of view of both the Kisan Credit
Card (KCC) holders and commercial banks. It is an innovative product designed by the Gov-
ernment of India (GOI) in consultation with RBI/NABARD. The facility of issuing “check-
books” to KCC borrowers is one of the important improvements. But this product needs
further improvements by making it a technology-driven extension of Automated Teller Ma-
chine (ATM) to agriculturists in rural and semi-urban areas KCC ATM CARD provides ben-
efits to agriculturists as well as to commercial banks. Agriculturists get instant cash for agri-
culture inputs such as fertilizers, seeds, pesticides, and overdraft facility to current account
holders holding “KCC ATM CARD” which involves no cost and boosts self-esteem among
farmers. On the other hand, by providing the ATM facility, commercial banks can reduce
fixed cost per transaction, The Author feels that extending technology-driven products will
boost the image of commercial banks and helps to enlarge the base of his value agriculture
advance which could attract more farmers to commercial banks.

Swan (2004), surveyed credit cards. “A credit card: A competitive market.” It observed
that with the more entrants in the field of credit cards: major players are trying to gain a
market share with aggressive promotional strategies and additional value-added services.
Some hanks though offer an international level of services and credit support to cardholders
but have failed to make an impression in the market due to lack of awareness and low-key
advertising. It also observed that despite the aggressive effort of the banks, the vast majority
of the Indian population is yet to come to grips with credit cards.

Jagdeesh (2005) “Credit card fraud: causes and cures from professional's perspective.”
Put a light on credit card fraud which is increasing worldwide. The culprit is not only the
outsiders but insider fraudsters who cheat their organization to make a quick buck. Bank
credit card issuers lose about $1.5 to $ 2 billion every year because of fraud The VISA and
Master Card, the two largest credit card issuers lose most. Major credit card frauds like un-
authorized use of credit cards, online frauds, shave and paste of cards, counterfeiting, and
mail order fraud are the techniques used by the fraudster. The author also discusses the tips
for the prevention of fraud like using smart cards, computer edits, and PIN) numbers, and
suggests that it is in their interest that the cardholders should keep their cards safely and use
the cards wisely to protect themselves from frauds.

Johnson (2005), “Recent development in the credit card market and the financial obli-
gation ratio” exhibits that over the past fifteen years, US households in the aggregates have
devoted an increasing share of their after-tax income to the payment of financial obligations.
Much of the increase is attributable to a rise in the level of credit card debt, which has raised
the share of households' aggregate after-tax income that is devoted to credit card payments.
This article argues that three important developments in the credit card market over the period
account for most of the rise in credit card payments relative to money and played a strong

13
role in the rise of the total financial obligation ratio (FOR). First, improvements in credit
scoring technology and the advent of risk-based pricing of credit card debt have increased
the share of PhonePe, particularly lower-income households with credit cards. Second, in the
1990s, credit card interest rates began to vary with changes in broader market interest rates,
which in turn led to an especially pronounced decline in credit card interest rates turned
sharply lower, the decline in credit card rates raised the demand for credit card debt. Finally,
the household has increased its use of credit cards as a convenient means of paying for daily
purchases.

Pinto and Beth (2005), “Information leased from Socialization Agents: Is Relationship
to Credit Card Use.” Shows that credit card use among college students has reached an
unprecedented level. As a result, there is a movement to educate college students on the usage
of credit cards in a better way. This research examines the credit information provided by
four socialization agents (parents, peers media, and schools). In addition, it assesses the re-
lationship between these socialization agents and the credit usage behavior of college stu-
dents. Using paired sample T-tests, the results indicate that the amount of credit information
given by parents is significantly greater than the information from the other three sources
(Schools, Peers, and media). The more information provided by parents, the lower the out-
standing balance carried by college students on their credit cards. Media sources, educational
sources, and peer sources of information showed no significant relationship with credit use.

Sant (2005), “Credit Cards Emerging Trends and Prospects” shows benefits, growth po-
tential growth, usage patterns, technological changes, delinquency rates, and fraud settle-
ment, by credit card companies. Survey shows that spending per cand in India are very low
at around Rs. 20,000 per year against the international average of around $900 (about Rs.
40,000) per year per cand. Demands have increased for higher quality and level of services.
Major card issuers in India, domestic and foreign, are currently busy racking their brains in
trying to protect their organizations from fraud. To overcome this problem a new technology
Le. "Smart-Card" that allows for greater security against fraud. The authors feel that with the
establishment of the Credit Information Bureau of India Ltd. (C/B/L), customers had the
motivation to maintain a good credit history, which helps in lowering delinquency rates. The
article also shows that the credit card industry has grown by 37% with ten million cards in
circulation.

Al-Alawi and Al-Amer (2006), “Young Generation Attitudes and Awareness Towards
the implementation of Smart Card in Bahrain an exploratory study.” The study sheds
light on the latest advancements and innovations in the world of information and communi-
cation technology by way of smart cand. A smart card resembles in size and shape a normal
credit card or bank ATM card, with a microprocessor chip implanted into the card. These
cards are used not just as identity cards but hold a relatively huge amount of editable infor-
mation including the cardholder's bank data, PhonePe, fingerprint, health record, blood
group, traffic and license details, and other vital information. The study presents a general
overview history, features applications, and introduction of smartcards in the Kingdom of
Bahrain. A total of 513 questionnaires were distributed to the students of the University of

14
Bahrain. The questions asked included questions to check the acceptance of the people to
replace their current cards with smart card and their awareness of the new National Smart-
cards in Bahrain. It also evaluates the effects taken by the government to create awareness
among the public about the usage and features of smart cards.

Worthington (2007), “The adoption and usage of credit cards by urban-affluent con-
sumers in China.” The purpose of this paper was to present exploratory research into the
holding and usage of credit cards by a distinct segment of the Chinese population, who were
“early adopters” of this product. Primary data was collected for taking a sample of the urban
affluent population in China to gauge preferences and attitudes toward the use of credit cards.
The sample was drawn from a narrower base than the actual target population of the urban -
affluent market but an available and valid respondent set, which offers insights into the "early
adopters" of the credit card product in China. It was found that the respondent was comfort-
able with the holding and use of credit cards and particularly recognized their value for spend-
ing on travel and entertainment. The research also identified purchase trigger points, which
indicated that the use of credit cards for purchases above certain values, is already prevalent
in the sample of urban-affluent Chinese consumers.

Devlin (2007), “An Analysis of main and subsidiary credit card holding and spending.”
This study seeks to examine why most multiple credit cardholders have a "main" card (i.e., a
card used more often than others) and “subsidiary” cards (i.e., cards used less often or only
in an emergency) and the spending pattern associated with main and subsidiary cards. This
study is qualitative, using a survey that contained open-ended questions to acquire data. Re-
sponses were subject to content analysis to categorize the reasons given for having a main
and subsidiary card. Results show that 85 percent of the 141 respondents indicated that they
had a main card and the most frequently quoted reason for having such a card was the superior
discount and promotions which were offered by the card issuer. Not surprisingly, main cards
were used for the broadest range of transactions while subsidiary cards were used for a more
restricted range of transactions, a majority saying that their subsidiary cards were held for
"stand by purpose". The results suggest that managers who market credit cards should aim to
ensure that, at all times, the discounts they offer, the promotions they arrange, and their loy-
alty schemes are superior to those offered by competitors. By meeting these aims, a higher
number of consumers, who are multiple cardholders, are likely to use their card as a main
card, thereby generating more income for their credit card issuer.

Amin (2008), “Factors affecting the intentions of customers in Malaysia to use mobile
phone credit cards” shows that mobile phones have provided an opportunity for banking
institutions to introduce new services to the public. The latest service, which is now available
in Malaysian banking institutions, is the mobile phone credit card. The purpose of this paper
is to provide a preliminary investigation of the factors that determine whether Malaysia's
bank customers will use the new mobile phone credit card technology Paper extends the ap-
plicability of the technology acceptance model (TAM) to mobile phone credit card and in-
cludes "Perceived credibility (PC)", the "amount of information about mobile phone credit
cards (AIMCs)" and "perceived expressiveness (PE)", in addition to "Perceived usefulness

15
(PU)" and "Perceived ease of use (PEOU)". The results indicate that PU, PEOU, PC, and the
amount of information contained on mobile phone credit cards are important determinants in
predicting the intentions of Malaysian customers to use mobile phone credit cards. However,
PE is not an important determinant in predicting the intentions of Malaysian customers to use
mobile phone credit cards.

Gan (2008), “Singapore credit cardholders: ownership, usage patterns, and percep-
tions.” The purpose of this study is to analyze Singapore's diverse cardholders in search of
variations among demographic groups, credit card profiles, and their perceptions about credit
card ownership and use. It then aims to discuss possible reasons governing Singaporean's
credit card ownership and use. In this study, decision trees were constructed using the chi-
square technique to examine the association between several credit cards and the demo-
graphic characteristics, perceptions, and other credit card-related variables. The number of
credit cards was found to be significantly influenced by income and gender as well as per-
ceptions that include "credit cards lead to spending", "Saving as payment source", "unrea-
sonable interest rates", "credit card as a status symbol," The number of credit cards was a lso
affected by credit-card-related variables such as missing payments sometimes, frequency of
use, entertainment expenditures, and patrol purchase. This research provides an in-depth un-
derstanding of Singaporean multiple cardholders; thus, it is useful in designing marketing
strategies for card issuers as well as anti-debit strategies for policy-makers in Singapore.

Al-Lahim (2009), in his research “Development of Electronic Money and its Impact on
the Central Bank Role and Monetary Policy” asserts that in recent years there has been
considerable interest in the development of electronic money schemes. Electronic money has
the potential to take over cash as the primary means of making small-value payments and
could make such transactions easier and cheaper for both consumers and merchants. Elec-
tronic money is a record of the funds or "value" available to a consumer stored on an elec-
tronic device in her possession, either on a prepaid card or on a personal computer for use
over a computer network such as the Internet. This paper argues that electronic money, as a
network good, could become an important form of currency in the future. Such a development
would influence the effectiveness and implementation of monetary policy. The author feels
that, if an increased use of PhonePe money substantially limits demand for central bank re-
serves, it would require changes in the operational target of the central bank and a closer
coordination of monetary and fiscal policies.

16
 CHAPTER – 4

COMPANY PROFILE

PhonePe is a company that develops a mobile payments app. The application allows users
to transfer money instantly to anyone, by using just their mobile number. The Company's app
is used in a smartphone with data connectivity and a bank account linked to a user's mobile
number. Many empirical studies have been conducted on the subject of “Plastic Money” in
India and abroad.
The major emphasis FxMart received its license to operate on 26 August 2014. PhonePe was
incorporated in December 2015. In April 2016, the company was acquired by Flipkart, and
as a part of the Flipkart acquisition, the FxMart license was transferred to PhonePe and it was
rebranded as the PhonePe wallet. PhonePe's founder Samper Nigam was appointed as the
CEO of the company. In August 2016, the company partnered with Yes Bank to launch a
UPI-based mobile payment app, based on the government-backed UPI platform.

In October 2017, “PhonePe launched a POS device built in India.” The Bluetooth-enabled
POS device looks like a calculator and works with AA batteries. The hardware uses Bluetooth
connectivity and enables payments through all the mobile devices that can access the
PhonePe app. In January 2018, PhonePe partnered with Freecharge. This partnership has em-
powered PhonePe users to link their existing FreeCharge Wallets to the PhonePe app.
PhonePe has also entered into similar partnerships with Jio Money and Airtel Money.
PhonePe also partnered with RedBus, Ola, and Goibibo to launch micro-apps on its platform
to build and deploy apps on its platform with a unified login and payment experience for
users.

In September 2019, PhonePe unveiled PhonePe Swatch for integrating several other mer-
chant apps to help users switch between PhonePe and other apps. In January 2020, PhonePe
started allowing its customers to withdraw cash using the in-app UPI feature called PhonePe
ATM. This involves transferring the intended amount to be withdrawn to a nearby PhonePe-
enabled merchant.

On 14 January 2017, ICICI bank blocked PhonePe transactions, giving the reasons that it
did not meet the NPCI guidelines. Initially, on 19 January 2017, NPCI instructed ICICI to
allow UPI transactions via PhonePe. During this period. Airtel too blocked PhonePe transac-
tions on its platforms. A day later, on 20 January 2017, NPCI renounced the previous instruc-
tions citing the reason that PhonePe indeed violated the UPI norms. After this PhonePe closed
its operations on Flipkart's website, to align itself with the terms stated in the updated verdict
from NPCI. By February 2017, PhonePe resolved the issues with ICICI.

Our goal is to make digital payments so easy, safe, and universally accepted that people never
feel the need to carry cash or cards again. We believe India is at the cusp of a new mobile

17
revolution, which will change the way we manage our money on the go. We see ourselves
facilitating this change, through technology and dogged customer centricity.

Short-Term Step

The Short-Term Steps for the Promotion of Payments through Card/Digital Means, which
will be implemented within one year, are suggested as follows:

A. Promotion of Card Digital Transactions in Government Payments and Collections.

• Government Departments Organizations/ Central Public Sector Undertakings/Anchor

Networks shall take steps to (a) withdraw convenience fee/service charge surcharge on
customers who prefer to make card/ digital payments for essential commodities, utility
service providers, petrol pumps, gas agencies, railway tickets/ IRCTC, tax department,
museums, monuments, etc. (b) take appropriate steps to bear MDR cost like other mer-
chants; and (c) build acceptance infrastructure (POS Mobile POS terminals) for card/dig-
ital payments at all collection centers.

• Ministry of Road Transport & Highways/ Ministry of Urban Development shall facilitate
the use of existing open-loop systems issued by a bank for multipurpose use, including
for making transit payments with a dedicated application (e.g., Toll fees, metro rail, bus
services, etc).

• Department of Financial Services/ RBI shall ensure that each eligible account holder un-
der PMJDY may be provided access to digital financial services in addition to the "RuPay
Card".

• Ministry of Electronics & Information Technology shall formulate an action plan to en-
sure Government Departments/Organisations introduce appropriate acceptance infra-
structure and facilitate collection of all revenue, fees, penalties, etc. through card/digital
means beyond a specified threshold, through "PayGov India" or other mechanisms.

• The Ministry of Electronics & Information Technology shall develop PayGov India as a
"single unified portal" across central, and state governments and their public sector un-
dertakings for collection purposes.

B. Measures for Wider Adoption of Card/Digital Transactions.

• Department of Financial Services RBI shall take steps to (a) rationalize Merchant Dis-
count Rate (MDR) on Cand transactions; and (b) formulate a differentiated MDR frame-
work for some key transaction segments, such as utility payments and railway ticketing
by examining the matter holistically in consultation with the stakeholders.

18
• Department of Financial Services/RBI shall relax Two Factor Authentication for both
card present and card not present transactions below a certain specified amount. DFS RBI
shall work out a multi-authentication framework for low, medium, and high-value trans-
actions.

• The Department of Revenue shall take steps to remove double taxation, if any, on service
tax currently paid on MDR by the acquiring bank and on interchange fees by the issuing
bank.

• Wherever needed, the Departments Ministries shall make modifications in the Rules and
Regulations that may have been issued, so that appropriate change is incorporated to al-
low payments/receipts by using cards digital means also. Cash payments by any Govern-
ment Department Agency shall be allowed only under very specific circumstances for
clearly stated reasons.

• Department of Revenue Department of Financial Services shall mandate payments be-

yond a prescribed threshold only in card/digital/cashless mode.

C. Creating Acceptance Infrastructure

• Department of Financial Services RBI shall introduce formulae linked acceptance infra-
structure for different stakeholders of certain card products through the appropriate ratio
of POS terminals/ mobile POS terminals to cards issued or other means. The possibility
of creating an Acceptance Financial Inclusion Find for the purpose shall be explored.

• Department of Financial Services/ RBI shall PhonePe requirements under PML. Act and
Rules, for bringing Uniform (Know Your Customer) KYC norms based on an authorised
identity for all payment systems, including Unique Identification Number or other proof
of identity. Appropriate steps shall also be taken to introduce tiered KYC for facilitating
low-, medium-, and high-value transactions through cards and digital means.

• Department of Financial Services RBI shall amend and simplify the Merchant Acquisi-
tion guidelines to include a Unique Identification Number or other identity-based eKYC
for merchants.

• Department of Financial Services RBI shall take steps to allow enhanced Cash out, of a
specified amount, at Point of Sale (POS) Terminals through Cards/ Digital means.

D. Encouraging Mobile Banking Payment Channels

• Department of Telecommunications shall take appropriate steps for rationalization reduc-

tion of USSD Charges and the feasibility of its being charged only on successful transac-
tions.

19
• Department of Telecommunications Department of Financial Services/ RBI shall make a
provision for a unified USSD platform that can support transactions across all payment
mechanisms.

• Department of Financial Services RBI shall promote mobile banking to leverage upon
the huge infrastructure available at a lower cost. Towards this end, steps shall be taken to
address mobile banking registration and activation challenges; ease regulations, and re-
duce entry barriers to digital wallets PhonePe paid instruments.

E. Awareness and Grievance Redressal

• Department of Financial Services RBI shall take steps (a) to create necessary assurance
mechanisms for fraudulent transactions wherein, in case of a fraudulent transaction, the
money will be credited back to the customer account and blocked and subsequently re-
leased after the investigation is complete, within a maximum of 2-3 months; (b) to
strengthen the role of banking ombudsman to provide greater customer confidence and
(c) to formulate a comprehensive customer protection policy for transactions through
cards and digital means.

• Department of Financial Services RBI shall take steps to optimally use funds under the
Depositor Education and Awareness Fund (DEAF) for expanding acceptance infrastruc-
ture and conducting awareness campaigns for a less-cash society.

Medium-Term Step

The Medium-Term Steps for the Promotion of Payments through Cards Digital Means, which
may be implemented within two years, are suggested below.

• Department of Financial Services/RBI shall frame necessary guidelines for merchant pay-
ment standards and interoperability between various issuers and acceptance networks,
including telecom, internet, PhonePe intent providers, and payment banks, to ensure that
merchant payments are interoperable across the broad spectrum of payments and settle-
ments system.

• Department of Economic Affairs shall constitute one or more Committees with key in-
dustry stakeholders, RBI, and concerned Government Departments to review the payment
system in the country. The following issues, among others, may be addressed by the
Committee:

a) Need for changes, if any, in the regulatory mechanisms under the Payments and
Settlement Systems (PSS) Act, 2007, and, in other legislations affecting the pay-
ment ecosystem.

20
 b) Leveraging unique identification Numbers or other proof of identity for authenti-
cation of cards' digital transactions and setting up a Centralised KYC Registry.

c) Introduction of a single window system of Payment Gateway to accept all types

of Cards Digital payments for Government receipts and enable settlements be-
tween consumers and merchants via NPCI or other agencies within specified time-
lines.

d) Studying feasibility and framing rules for creating a payment history for all
card/digital pay

• The Department of Revenue Department of Economic Affairs Department of Financial

Services shall grant tax rebates/incentives or introduce mechanisms for cash back lottery
or any other measures to incentivize transactions through cards and digital means.

• Department of Financial Services RBI shall develop a methodology for enabling very
high-value transactions through cards and digital means beyond the limit presently pre-
scribed.

21
 CHAPTER – 5

PHONEPE BUSINESS MODEL

PhonePe operates within the digital payments and financial services sectors through a com-
bined B2B and B2C business model.
Consumer Side: PhonePe provides a digital payment platform on the consumer side, allow-
ing users to conduct seamless transactions using their smartphones. Users can connect their
bank accounts, debit cards, and credit cards to the PhonePe app, facilitating payments, money
transfers, mobile phone recharges, bill payments, and more. With a user-friendly interface
and a secure platform, PhonePe ensures a convenient and efficient experience for financial
transactions.
Merchant Side: PhonePe serves merchants by offering payment solutions and tools to facil-
itate digital payments. Merchants can leverage the PhonePe app or integrate PhonePe's pay-
ment gateway into their applications or websites. This integration enables them to accept
payments through various methods, including UPI, cards, and wallets. PhonePe enhances the
merchant's payment experience by providing features like payment notifications, transaction
history, and easy reconciliation.
PhonePe holds a license from the Reserve Bank of India (RBI) to offer services related to
money transactions and payment systems in India. The company's goals include expanding
its user base, generating profits, and extending its service portfolio beyond conventional
banking transactions.
The suite of PhonePe Services encompasses a broad range of offerings, including Pre-Paid
Instruments, Gift cards, Payment gateways, Recharges and Bill Payments, Insurance, Mutual
Funds, Gold sales and purchases, and switch interfaces and access. These services reflect
PhonePe's commitment to delivering a diverse and user-centric platform that caters to various
financial needs.

Phonepe Revenue Model

PhonePe operates on a multifaceted revenue model that encompasses diverse income

streams.
Transaction Fees: Revenue is generated by PhonePe through the imposition of transaction
fees or commissions on each transaction conducted on its platform. This includes fees asso-
ciated with UPI payments, bill payments, recharges, and other financial transactions pro-
cessed through the app.

22
Merchant Services: PhonePe extends merchant services, allowing businesses to accept pay-
ments via its POS machines. The company earns revenue by charging merchants a fee for
utilizing its POS machines and accepting payments from their customers.
Insurance Brokerage: Holding an insurance brokerage license from the Insurance Regula-
tory and Development Authority of India (IRDAI), PhonePe offers insurance products to its
user base. Revenue is derived through commissions on the sales of insurance policies.
Affiliate Commissions: PhonePe collaborates with various brands and vendors to promote
their products and services to its users. It earns affiliate commissions when users make pur-
chases or interact with partner offerings through the PhonePe platform.
Advertising and Promotions: Revenue is generated through advertising and promotional
activities on PhonePe's platform. Brands and businesses can leverage the app to access a
broad user base, and PhonePe charges fees for advertising and promotional placements.
Data Insights: PhonePe utilizes its extensive user database to gather valuable insights into
payment patterns, customer behavior, and preferences. These insights can be leveraged for
targeted marketing and data-driven decision-making, potentially generating revenue through
data analytics services or partnerships.

Phonepe Growth and Revenue

Founded in December 2015, PhonePe was acquired by Flipkart in 2016 for approximately
$20 million. Since then, the company has undergone remarkable growth, achieving a valua-
tion exceeding $12 billion in 2023.
In 2017, PhonePe made history as the first UPI-based app to surpass 10 million downloads
and has consistently maintained a prominent position among the top finance apps in major
app stores. It has become a key player in UPI transactions, reaching the significant milestone
of 1 million app transactions in a single day in 2017. Demonstrating its popularity as a digital
payments service provider, PhonePe recorded $2 billion in monthly transactions in October
2021. Notably, the company achieved a milestone by processing 5 billion (5.33 billion) trans-
actions via the unified payments interface (UPI) for the first time in October 2023.

PhonePe's growth is exemplified through its introduction of innovative offerings such

as the Smart Speaker, Pulse platform, Pincode App, merchant lending platform, and
POS devices.

23
PhonePe Financials
PhonePe experienced strong revenue growth, with a notable surge of 77%, reaching Rs 2,914
crore in FY23, compared to Rs 1,646 crore in FY22.
The company reports that in FY23, the EBITDA for the payment segment was negative Rs
1,755 crore, contrasting with negative Rs 1,622 crore in FY22.

Phonepe Challenges Faced

Embarking on its journey posed a substantial challenge for PhonePe, given the novelty and
relatively unexplored nature of the industry. However, the acquisition of PhonePe by Flipkart
marked a turning point, resolving many uncertainties.

Obstruction by ICICI Bank and Airtel, On January 14, 2017, ICICI Bank blocked PhonePe
due to non-compliance with NPCI guidelines. Although the NPCI initially instructed ICICI
to permit UPI transactions via PhonePe on January 19, 2017, the regulatory body later af-
firmed that the digital payments service provider had indeed breached UPI norms. Airtel also
blocked PhonePe transactions on its platforms during this period.
This situation prompted PhonePe to suspend operations on Flipkart's website, allowing the
startup to align itself with the terms outlined in the updated NPCI verdict. By February 2017,
PhonePe had successfully resolved these issues with both ICICI and Airtel.

QR Code Burning Incident, PhonePe faced a significant incident where its QR codes were
allegedly burned by Paytm employees. In response, PhonePe promptly filed a police com-
plaint at Surajpur Lakhnawali police station in Greater Noida. Once the individuals involved,
including a Paytm Area Sales Manager (ASM) and a former PhonePe employee, were iden-
tified, Paytm took swift action and suspended them. Paytm emphasized its commitment to
upholding high standards of work ethics and asserted a zero-tolerance policy for any form of
misconduct.

Domicile Shift and Investor Contribution, shifting its domicile from Singapore to India
presented another challenge for PhonePe. Investors played a crucial role by contributing ap-
proximately Rs 8,000 crore in taxes to facilitate this domicile shift. This substantial financial
support from investors played a pivotal role in aligning PhonePe's operations with the regu-
latory framework in India.

24
PhonePe – Partnerships
Throughout its operational history, PhonePe has forged numerous significant partnerships.
Here's an exploration of some key collaborations:

• In July 2021, PhonePe entered into a partnership with Axis Bank to adopt the UPI
multi-bank model, building upon its existing collaboration with Yes Bank.
• Collaborating with Ola in July 2020, PhonePe enabled Ola payments through its app
and wallet, fostering a seamless payment experience.
• A notable alliance unfolded in July 2021 when PhonePe partnered with Flipkart to
digitalize cash-on-delivery payments, introducing greater efficiency to the payment
process.
• PhonePe assumed the role of the official payments partner for KBFC in September
2021, further expanding its reach and influence in the payment’s domain.
• In December 2021, PhonePe joined forces with Edelweiss General Insurance, aiming
to provide digital motor insurance products, thereby enhancing its offerings.
• An impactful partnership emerged in April 2022 as PhonePe collaborated with Ex-
treme IX intending to reduce latency in the PhonePe app during transactions, demon-
strating a commitment to a smoother user experience.

PhonePe - Funding And Investors

As of May 2023, PhonePe has secured more than $2.6 billion in funding through 18 rounds.
The ongoing financing round, featuring investments from notable backers such as General
Atlantic, has propelled the valuation of Walmart-backed PhonePe to $12 billion. Detailed
information about PhonePe's funding rounds and investors is provided below:

Date Amount Raised Round Lead Investors

May 22, 2023 $100 million Private Equity General Atlantic
April 12, 2023 $100 million Private Equity General Atlantic
March 17, 2023 $200 million Corporate Walmart
February 14, 2023 $100 million Private Equity -
January 19, 2023 $350 million Private Equity General Atlantic
August 18, 2021 $350 million Corporate Walmart
December 14, 2020 $21 million Corporate Flipkart
December 3, 2020 $700 million Corporate Walmart
April 27, 2020 $28 million Corporate Flipkart
February 26, 2020 $59.6 million Corporate Flipkart
December 10, 2019 $78.8 million Corporate Flipkart
October 22, 2019 $54.7 million Corporate Flipkart
July 30, 2019 $93.5 million Corporate Flipkart

25
 March 22, 2019 $101 million Corporate Flipkart
August 9, 2018 $60 million Corporate Flipkart
April 1, 2018 $42.7 million Corporate Flipkart
March 23, 2018 $69.4 million Corporate Flipkart
October 4, 2017 $33.4 million Corporate Flipkart

PhonePe – Acquisitions
PhonePe has completed six acquisitions, which include Indus OS, Zopper, GigIndia, Indus
App Bazaar, OpenQ, and WealthDesk. Particularly noteworthy is its combined acquisition
of OpenQ and WealthDesk in May 2022, amounting to a total deal value of $75 million.
Furthermore, in July 2022, PhonePe disclosed its acquisition of OSLabs, the parent company
of Indus, following an amicable settlement with Affle Global.

Acquiree Name Date Amount

Indus OS July 29, 2022 $60 million
OpenQ May 18, 2022 $25 million
WealthDesk May 17, 2022 $50 million
GigIndia March 22, 2022 -
Indus App Bazaar May 19, 2021 $60 million
Zopper July 16, 2018 -

PhonePe - Advertisements and Social Media Campaigns

PhonePe actively utilizes advertising and social media campaigns as part of its strategy to
promote its digital payments platform and services. The company has implemented success-
ful marketing initiatives to enhance brand awareness and stimulate user engagement.
One noteworthy campaign by PhonePe took place during the IPL in 2020, featuring popular
actors Aamir Khan and Alia Bhatt. This highly effective marketing effort successfully com-
municated the message of encouraging individuals to adopt digital payments for their con-
venience and security. The campaign emphasized PhonePe's seamless transaction experience.
In April 2023, PhonePe introduced its latest brand campaign, titled “PhonePe - Insurance
your way”, with a specific focus on motor insurance. The campaign aims to highlight the
distinct advantages of obtaining motor insurance through PhonePe, emphasizing the conven-
ience, reliability, and the absence of unwarranted calls or unnecessary add-ons.

26
PhonePe - Awards and Achievements
PhonePe has garnered various prestigious awards and accolades, including:

• Acknowledgment from the National Payments Corporation of India (NPCI) for or-
chestrating the largest number of merchant transactions on the UPI network in 2018.
• Best Mobile Payment Product or Service Category at the IAMAI India Digital Awards
2019.
• Excellence in the Insurtech category at Assocham's Fintech and Digital Payments Awards
2021.
• Winner at the Third ET BFSI Innovation Tribe Virtual Summit & Awards (APAC edi-
tion).
• Winner at the 8th Annual India Retail and e-Retail Awards 2019.
• Winner at the IAMAI 9th India Digital Awards 2019.
• Best BFSI Brand 2023 at The Economic Times Best BFSI Brands Conclave.
• Best Payment Solutions and Best Insurtech of the Year at the BW Festival of Fintech
2023.

PhonePe – Competitors
PhonePe faces stiff competition from key players in the digital payments landscape, including
Google Pay, Amazon Pay, Whatsapp Pay, Juspay, Paytm, MobiKwik, BharatPe, and
others.

• Google Pay (GPay), stands out as a digital wallet platform and online payment service
developed by Google. Launched in 2011, GPay initially focused on providing contactless
payment options.
• Amazon Pay, established in 2007, functions as an online payment processing service
owned by Amazon, with its headquarters in Seattle.
• Whatsapp Pay, powered by social media giant Facebook, facilitates money transfers
within its messaging platform, allowing users to send and receive money seamlessly dur-
ing chats.
• Juspay, founded in 2012, is an online platform dedicated to mobile-based payments.
• Paytm, established in 2010, is a trailblazer in the Indian eCommerce payment system and
operates as a financial technology company.
• MobiKwik, founded in 2009, is an Indian company offering a mobile phone-based pay-
ment system.
• BharatPe, founded in 2018, serves as a platform tailored for retailers and businesses,
providing a QR-based payment app.

27
 Phonepe Marketing Strategy

Recently, PhonePe earmarked a marketing budget of INR 8,000 crore to expand its footprint
in the country while simultaneously confronting growing competition. In a strategic move,
the company secured endorsements from two highly acclaimed Bollywood celebrities,
Aamir Khan and Alia Bhatt. The company aims to increase its user base by more than 100
million people annually until it achieves the ambitious goal of reaching 500 million verified
users.
PhonePe heavily relies on television, social media platforms, and its YouTube channel to
promote new features and offers. With each television commercial, PhonePe unveils a fresh
tagline, with the current one being "Karte Ja, Badhte Ja"! Notably, the company actively
promotes gold transactions on its platform.
PhonePe has received numerous awards and recognitions, including being honored as the
best Mobile Payment Product or Service at the IAMAI India Digital Awards 2018, receiving
the SuperStartUp Asia Award in the same year, and being declared the winner at the 8th
Annual India Retail and e-Retail Awards 2019. Additionally, it was recognized as the best
Mobile Payment Product or Service at the 2019 edition of IAMAI Digital Awards, secured a
position among the Top 10 most trafficked platforms by Comscore, and achieved the title of
India’s fastest-growing insure-tech distributor by selling 5 lakh policies in just 5 months.
In terms of technology, PhonePe is actively leveraging artificial intelligence. Reportedly, the
company utilizes Hbase as its primary Big Data Technology to enhance user decision-making
capabilities. Interestingly, this contrasts with the common practice of using base for offline
tasks by most other companies. PhonePe’s systems efficiently integrate data-driven insights
and user preferences, enabling the machine learning model to expertly personalize reminders
for various payments (recharge, postpaid bills, utility bills) for each user. In an official state-
ment, the company emphasized its use of Machine Learning to drive increased conversion
rates for both users and partners.

28
 CHAPTER – 6

DATA ANALYSIS & INTERPRETATION

Studies have been carried out on the PhonePe system. Questions are related to the PhonePe
system in which given options are Agree, Disagree, Strongly Disagree, Strongly Agree, and
Neutral.

Overall Analysis of the PhonePe system based on survey:

Strongly Strongly
Questions Agree Disagree Neutral
Disagree Agree
1. PhonePe system saves you time and 78 30 15 68 9
money.
2. The PhonePe system is better than 60 69 15 38 18
offline payment system.
3. PhonePe system open 24 hrs. 68 32 27 50 23
4. Exchange money from one location 70 43 11 64 12
to another location.
5. A large no. of users are satisfied 52 50 21 52 25
with this.
6. Get a quick response to this. 54 30 22 74 20
7. Reduce paperwork. 54 20 14 63 6
8. It is a reliable service. 97 47 49 23 8
9. Hackers can access digitized infor- 73 7 6 73 10
mation & records of PhonePe.
10. The customer has to be alert, 95 6 4 106 1
he/she must deal with a secure site us-
ing the PhonePe system.
11. Need internet and PhonePe sys- 85 56 15 37 7
tem user experience.
12. Gateway plays an important role 70 8 3 112 7
in the PhonePe payment system.
13. Chance of making mistakes. 93 43 14 32 18
14. A greater choice for consumers 94 26 20 37 23
and merchants in the way they send
and receive payment.

29
15. The trend is buying goods and ser- 93 19 4 68 16
vices over the internet from online
shops.
16. Consumers can transfer money 92 12 18 63 36
easily without having to visit a bank.
17. The debit card had slowly started 78 14 3 42 28
and their growth only took in the last
three years.
18. Consumers and suppliers can be 68 33 6 77 15
directly approached over the Internet.
19. Customers can easily use only a 56 52 36 78 16
payment system with convenient and
immediate access to find deposits via
debit card.
20. Transaction costs are hidden from 88 31 20 40 30
users.
21. It provides a legal record of busi- 98 12 8 31 20
ness communications.
22. To reach out to global consumers 57 31 36 62 17
easily and is also cost-effective.
23. PhonePe payment is not simple 55 49 52 59 8
anywhere and, in any currency, thus
matching the global reach of the inter-
net.
24. The PhonePe payment system is 21 44 108 36 12
not used directly by an individual to
make the payment to other individu-
als.
25. PhonePe payment provides 100 22 6 65 7
greater freedom to an individual in
paying their taxes, licenses, fees,
funds, etc.
26. PhonePe cheque clearance is not 78 34 63 7 18
easier than paper cheques.
27. Problems will not arise if your 65 27 29 70 9
debit card is lost or stolen.
28. The PhonePe payment system can 64 42 27 55 12
be easily understood & readily
adopted.
29. PhonePe cash payment system 90 4 4 108 1
bank issues tokens to the customer.
30. Smart card is not helpful for small 13 61 108 8 10
transactions.

30
The overall analysis of the PhonePe payment system based on the survey:

120

100

80

60

40

20

0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29

Agree Disagree Strongly Disagree Strongly Agree Neutral

The given graph reveals the five options i.e., (Agree, Disagree, Strongly Disagree, Strongly
Agree, Neutral)

A graph representing the number of people agreed is shown:

Agree
100
90
80
70
60
50
40
30
20
10
0
1 4 7 10 13 16 19 22 25 28

Agree

31
Maximum no. of people (100) Agree on Q no.25 PhonePe payment provide greater freedom
to an individual in paying their taxes, licenses, fee, funds, etc. Most people agree on time-
saving 24 hours open, get quick response. Minimum no. of people (13) Agree on Q no.30
Smart and does not help carry out small transactions. A smaller number of people are satisfied
with the PhonePe payment mode of transaction.

Graph represented the number of people Disagreed is shown:

Disagree
100
90
80
70
60
50
40
30
20
10
0
1 4 7 10 13 16 19 22 25 28

Disagree

Maximum no. of people (69) Disagree Q no.2 PhonePe Payment system is better than offline
payment system. Most people disagree on the transaction costs, and the satisfaction of the
user, and smart cards are helpful for small transactions. Minimum no. of people (4) Disagree
on O no 29 In the PhonePe Cash Payment system bank issues tokens to the customer. Few
people disagree on the legal record of business communication. Many people think that the
payment system could be more reliable, in which many mistakes can occur.

32
Graph represented the number of people who Strongly disagreed is shown:

Strongly Disagree
70

60

50

40

30

20

10

0
1 4 7 10 13 16 19 22 25 28

Strongly Agree

Maximum no. of people (108,108) Strongly disagree on Q no 24 & Q no. 30. The Payment
system is not used directly by individuals to make payments to another individual. A smart
card is not helpful for small transactions mostly people strongly disagree that cheque clear-
ance easier than paper cheques. Minimum no. of people (3) Strongly disagree on Q no.17
The debit cards had slowly started and their growth only took off in the last three years lesa
no people strongly disagree or easily understand that security is the big issue in the payment
system, hackers can access account information.

Graph represented the number of people who Strongly agreed is shown

Strongly Agree
100
90
80
70
60
50
40
30
20
10
0
1 4 7 10 13 16 19 22 25 28

Strongly Agree

33
Maximum no. of people (113) Strongly agree on Q no.12 Gateway plays an important role in
the PhonePe payment system. Most people strongly agree on saving time, reducing paper-
work, exchanging money, etc. Minimum no. of people (7) Strongly agree on Q no.26
PhonePe cheque clearance is not easier than paper cheques. Fewer no agree that the PhonePe
payment system is not safe.

Graph represented the number of people Neutral is shown:

Neutral
80

70

60

50

40

30

20

10

0
1 4 7 10 13 16 19 22 25 28

Neutral

Maximum no. of people Neutral on Q 10:25 PhonePe Payment provides greater freedom to
an individual in paying their taxes, licenses, fees, funds, etc. Most people are Neutral on
adoption easily, lost or stolen card Minimum no. of people Neutral on Q no 29 and 10. In the
PhonePe Cash Payment system bank issues tokens to the customer. The customer has to be
alert, he must deal with a secure site that uses the PhonePe payment system. Lesser no. of
people neutral on the experience of using payment systems need the internet.

34
Overall analysis on credit cards, Debit Card, Smart Card, PhonePe Cash, PhonePe
Cheque given below:

Modes
120

100

80

60

40

20

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Credit Card Debit Card Smart Card E-Cash E-Cheque

Based on the present study, the first remark is that despite the existence of a variety of
PhonePe e-commerce payment systems, credit cards are the most dominant payment system.
This is a consequence of advantageous characteristics, most importantly the long-established
networks and very wide user base. Second, alternative Phone E-commerce payment systems
on debit cards. In fact, like many other studies, the present study also reveals that the smart
card-based Phone e-commerce payment system is best and it is expected that in the future
smart cards will eventually replace the other electronic payment systems. Fourth, given the
limited user bases. PhonePe cash is not a feasible payment option. Fifth PhonePe Cheques
are quite cost-effective for companies that have to deal with huge volumes of cheques Thus,
several factors affect the usage of PhonePe e-commerce payment systems. Among all these
user bases are the most important. Make it difficult to choose an appropriate payment system.
Based on analysis, it is concluded that a smart card-based electronic payment system is best.
It has numerous advantages over other electronic payment systems.

35
Reasons of consumers buying online through PhonePe:

Chart 1: Reasons for buying online?

40
36
35 33

30
25
20
13 14
15
10
5 3

Comparison of Prices & Products Convenience Different Payment Options

Discounts Lots of Variety Found

Here it can be noticed that most people purchase online for their convenience and discounts.
Convenience would be concerning the availability of variety, products being couriered at
home or making payments online irrespective of different payment options, or keeping too
much cash at home.

Goods or services that are purchased online

Chart 2: Goods/Service Purchased Online

45
39
40 36
35 31
29
30
25
25 23 22
20
20 18 18

15 13

10
4
5
0
Female Male

Utility Bills Food & Beverages Goods(Apparels, Electronics)

Local Public Transport Tickets For Events, Movies Motor Fuel

36
From the above graph, it can be noticed that males from our sample tend to purchase events
or movies and pay utility bills online whereas the females also tend to purchase events or
movies apart from purchasing goods like apparel. Here it can be noticed that apart from pur-
chasing things online people also prefer paying utility bills online. instead of standing in line
for and convenience of online payments.
The payment gateway is used while making online payments:

Chart 3: Payment gateway used while making online

payments
40 37
35 31
30 28
24
25
20 18
14 14
15 11
9
10 7 6
4
5
0
Cash On Delivery Credit Card Debit Card Net Banking Mobile banking Digital Payment
Platform

Female Male

From the above observations it can be noticed that most people choose Cash on Delivery
(COD), but if we collate other payment options below are the interpretations.
Payment Preference:

Chart 4: COD vs Other Online Payment Options

90
79
80

70

60
51
50
39
40
30
30

20

10

0
Cash On Delivery Other Payment Options

Female Male

37
There are various reasons that people are choosing physical payments as COD over online
payment platforms, below are the given bifurcation.

Reasons for adopting an online payment platform:

Chart 5: Why would you prefer an online payment

platform over physical payment?
20% 19% 19%
18% 16%
16% 15%
14% 13%
12% 11%
10%
8% 7%
6%
4%
2%
0%
Payment Coupons/Deal Easy To Track Discounts Time saving Cashback Convenience
Option

Data

Influence towards online payments:

Chart 6: What Influenced You To Use Online

Payments?
17%

49%

34%

Demonetisation Family Friends

38
It can be noticed that the maximum influence is through friends and then family and people
shift to online payments. Here it is observed that word of mouth has influenced the payment
services. Many organizations have limited e-payment platforms, so if the consumer wants to
purchase anything from that particular website, they have to choose from the available plat-
forms only, some extent the e-commerce platforms also influence the same. For example, in
Myntra any product purchased and if it is required to be returned, we have to download the
PhonePe App to get the money refunded.

Most Preferred Online Payment Platforms:

Chart 7: Which dgital payment platform do you use?

3%
14%

48%

35%

PhonePe Gpay PayTm Others

The threat of using online payments:

Chart 8: Biggest Concern while using e-payment

60
50
50 47
40 41
40 37
31 33 31
30 27

20 17 17 18

10 7 6
4 4 5
2 1 1
0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Fraud Security Privacy Tax

39
From the observation, it can be noticed that many agree that security and privacy are the
biggest concerns that many consumers agree with. The e-payment users would preferably
like to stick with only one or two apps only, instead of sharing their bank details on various
other platforms. Once the users use some particular app, they build up their trust in that app
only until and unless they experience or hear negative feedback they would switch. immedi-
ately.

40
 CONCLUSION

Technology has undeniably simplified our lives, and one notable advancement in banking,
finance, and commerce is Electronic Payments, exemplified by PhonePe transactions. These
transactions signify a technological leap that allows financial activities to be conducted elec-
tronically, eliminating the need for long queues and other inconveniences. Electronic Pay-
ments empower individuals to handle financial obligations such as taxes, licenses, fees, fines,
and purchases at unconventional locations and at any time throughout the year, providing
unprecedented flexibility.
Upon scrutinizing various electronic payment systems, it becomes challenging, if not impos-
sible, to definitively determine the best system, as many exhibits similar features with only
minor differences. The usage of PhonePe commerce payment systems is influenced by sev-
eral factors, with user preference standing out as the most crucial. The success of PhonePe
commerce payment systems is further contingent on factors like ease of use, cost, industry
consensus, authorization, security authentication, non-refutability, accessibility, reliability,
anonymity, and adherence to public policy.
Opting for a reliable and cashless payment system, like PhonePe, offers protection against
theft of physical and digital currency. The adoption of PhonePe payment solutions is driven
not only by cost reduction but also by various benefits such as enhanced customer service,
improved working capital, increased operational efficiencies, faster cycle times, streamlined
processing, and better compliance with organizational policies.
The move towards PhonePe payment systems introduces varying levels of risks in the realm
of marketing. Over a decade of Internet marketing research has produced significant findings,
emphasizing the growing role of the Internet in PhonePe payment. People are increasingly
recognizing the importance of assessing the collaborative effects of PhonePe payment. The
study reveals a lack of awareness and education among people regarding PhonePe payment,
based on survey responses where participants answered questions independently. While some
express satisfaction with the views presented, others remain dissatisfied.
The study highlights that online PhonePe payment offers broader customer reach, facilitates
easy feedback collection through the virtual nature of the internet, fosters customer loyalty,
allows for personalized attention from banks, and ensures the delivery of quality service.
Various strengths of the PhonePe payment system emerge, including quality customer ser-
vice, extensive reach, time-saving attributes, customer loyalty, easy information access, 24-
hour availability, reduced paperwork, elimination of the need to carry physical cash, and
streamlined online applications.

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 FUTURE SCOPE & PLANS

Through our extensive exploration of online payment systems, we've delved into various
contemporary trends and emerging technologies, including the utilization of platforms like
PayPal or Safety Pay's Online Cash Payment Platform. As one ponders the future trajectory
of online payment systems, it becomes evident that traditional credit and debit cards are on
the brink of obsolescence. This anticipation stems from the rapid advancement of mobile
technology and the burgeoning internet industry.
Our research has unveiled the unfolding landscape of innovative online mobile payment tech-
nologies. These advancements are poised to enhance the flexibility of your mobile device by
enabling the storage of credit and debit card information directly on your SIM card. The
practical application of this technology in consumer transactions is noteworthy. Upon reach-
ing the payment page of a website, your mobile device intuitively recognizes it and proposes
a payment method. Following your selection, transaction authorization occurs through fin-
gerprint recognition software on your mobile device, coupled with a series of security ques-
tions. This multi-layered approach serves as a safeguard, thwarting potential theft of banking
or personal information in the event of device loss or theft.
The convenience of utilizing your mobile device in transactions becomes apparent. With your
credit or debit card information pre-stored on your smartphone, the purchasing process on
any chosen website is streamlined, eliminating unnecessary steps. Furthermore, the wide-
spread comfort and familiarity individuals have with their mobile devices contribute to the
ease of completing transactions directly from smartphones, facilitating a seamless sales pro-
cess for companies. Recognizing that customers gravitate towards the path of least resistance,
integrating banking information into the SIM card and condensing the transaction to a simple
press on the "Buy Now" button significantly reduces the steps involved in online purchases.
Looking ahead, the future trajectory of research could entail developing systems with similar
features that support person-to-person settlements, further expanding the scope and effi-
ciency of digital transactions.
PhonePe harbors ambitious aspirations for the future, with plans to pursue an Initial Public
Offering (IPO) in the years 2024–2025. The company is poised to capitalize on its robust
user base, cutting-edge technologies, and strategic partnerships as key drivers for growth,
aiming to amplify its footprint in the market. Prioritizing seamless payments and fostering
financial inclusion, PhonePe is committed to enriching its product portfolio, broadening its
network of merchants, and establishing a comprehensive ecosystem of services. The decision
to go public is expected to unlock additional investment opportunities, propelling the com-
pany's expansion initiatives in the fiercely competitive digital payments landscape.

42
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