PhonePe is an Indian e-commerce payment system and digital wallet company backed by Walmart. Photo: AFP/NurPhoto

The Walmart-backed digital payments firm PhonePe cemented its dominance in India’s Unified Payments Interface, a state-run payments platform, in February over its nearest competitor Google Pay, which was the leading player until last November.

According to data released by the National Payments Corporation of India, which maintains the payments platform, PhonePe topped the list for the third straight month with 42.5% of transactions, followed by Google Pay with 36%.

PhonePe processed 975.53 million transactions amounting to 1.89 trillion rupees (US$26.6 billion) in February, while in January it processed 968.72 million transactions but the value was higher at 1.91 trillion rupees.

Google Pay processed 827.86 million transactions in February worth 1.74 trillion rupees ($23.99 billion). The once-dominant player has been facing a slide in its transaction volumes since November, when it was 960 million.

Started by three former Flipkart executives in December 2015, PhonePe was acquired four months later by Flipkart. In 2018, it became part of Walmart after the US retail giant acquired Flipkart for $16 billion. In December last year, PhonePe was partially spun off from Flipkart and its stake was reduced to 87% from 100%.

In February, the Unified Payments Interface recorded 2.29 billion transactions worth 4.25 trillion rupees ($58.60 billion). On a year-on-year basis, transactions were up 73% by volume and more than 90% by value. Almost 56% of transactions on the platform were peer-to-peer, while the rest were peer-to-merchant. In value terms, peer-to-peer accounted for more than 83% of the total.

The platform was developed by the National Payments Corporation of India in 2016 and it facilitates inter-bank transactions by instantly transferring funds between two bank accounts on a mobile platform. There are now 207 banks supporting the platform.

PhonePe and Google Pay controlled a little more than 78% of the market in terms of volume of transactions and 85% in terms of the value of transactions. Paytm remained a distant third in February with 340.71 million transactions involving 384.93 billion rupees ($5.31 billion), up from 332.69 million transactions worth 378.45 billion rupees ($5.22 billion) in January.

Amazon Pay processed 44.22 million transactions worth 38.31 billion rupees ($528 million) in February. The e-commerce giant is gradually scaling up investment in its digital payments business. Recently it invested 2.25 billion rupees and last October invested 7 billion rupees in Amazon Pay.

Interestingly, Facebook-owned WhatsApp Pay has so far failed to make much headway in the Indian market since its lauch last November. WhatsApp Pay processed 0.55 million transactions amounting to 324 million rupees. Its transactions have gone down since December when it processed 0.81 million transactions worth 297 million rupees.

Other players such as MobiKwik and Jio Payments Bank, promoted by Reliance Industries, processed 1.92 million and 0.36 million transactions respectively.