The Bengaluru-based fintech startup is awaiting a stockbroking licence from Securities and Exchange Board of India (SEBI), mentioned folks with direct data of the matter.
PhonePe intends to faucet its present buyer base to leapfrog established rivals in the broking business. It will encourage clients to put a fraction of the unutilised funds in wallets into markets, mentioned folks cited above. A PhonePe spokesperson declined to remark.
In March, PhonePe processed 1.19 billion Unified Payments Interface (UPI) transactions price Rs 2.31 lakh crore, cornering 44% of the UPI market, whilst its closest competitor Google Pay with 957 million transactions had a share of 35%.
Since 2019, the firm has been providing small-sized tailormade funding plans for its clients in the mutual fund house. PhonePe focused its wallet-based consumer base advertising the mutual fund investments as “fixed deposit-like returns” on the pockets cash. The fintech startup has additionally made nascent forays into India’s insurance coverage middleman house in addition to a consumer-facing distributor for insurance coverage corporations. PhonePe additionally has a financial savings product known as Liquid Fund on its app.
“PhonePe wants to become a full-fledged diversified financial services player,” mentioned an individual with direct data of the matter, including that the focus at PhonePe in the upcoming years can be rising insurance coverage, funding and service provider providers. The particular person added that the firm has no plans to enter the lending market anytime quickly.
PhonePe’s plans to enter India’s retail broking market comes at a time when it has been requested to reasonable its quantity on UPI to adjust to National Payments Corporation of India’s (NPCI’s)
new guidelines for third-party purposes, that requires a single entity to cap market share at 30%.
Its rival Paytm has already acquired an approval from SEBI for the retail stockbroking business and likewise launched some funding merchandise in the house. Market members mentioned there are no less than two extra fintech corporations which plan to enter inventory broking.
The entry of fintech corporations into broking business may stem one other spherical of value warfare in the broking business, triggered by low cost brokers like Zerodha and Upstox. Paytm has already began to supply its providers at half the value in contrast to what even the low cost brokerages supply. Cash-rich PhonePe may comply with an identical technique, say consultants.
The Flipkart Group agency
raised $700 million in a spherical led by Walmart in December of 2020.
“While India’s retail investment market still has space to grow, there are still over 20 million Indians who can be potential first-time investors. The main differentiator is the pricing—the flat fee at which trades are made,” mentioned the chief govt of a rival brokerage, requesting anonymity. “The new entrants such as Paytm Money have modelled their customer acquisition strategy by keeping their pricing—at Rs 10—much lower than the market average of Rs 20-25.”
In the previous 5 years, brokers like Zerodha and Upstox have captured bulk of the market share with aggressive brokerage plans like Rs 20 per transaction. This house was earlier dominated by brokerage arms of massive banks like HDFC Securities, ICICI Securities and Kotak Securities. The cheaper plans have pushed traders and merchants from the bank-owned corporations to the low cost corporations.