The companies announced the severing of their ownership in a Friday (Dec. 23) press release, stating the decision was made to allow each business to grow independently.
Flipkart acquired PhonePe six years ago, allowing the digital payments company to give over 35 million merchants in India a way to digitize their checkout process.
But now, after announcing a partial separation in December 2020, the brands will be separate entities.
“We are proud to see PhonePe grow and thrive as a successful organization in its own right. We are confident PhonePe will continue to scale and achieve its vision of providing financial inclusion to millions of Indians. Flipkart stays committed to its purpose to empower every Indian’s dream by delivering value through innovation in technology and commerce while helping small businesses connect to pan-India markets,” said Flipkart Group CEO Kalyan Krishnamurthy said in the release.
As part of the ownership separation agreement, Walmart will remain the majority shareholder for both Flipkart and PhonePe.
PhonePe also recently announced it sought to raise $1 billion for its financial super app. This new separation from Flipkart will allow the brand to continue raising funds from investors looking to bolster its plans to branch into new financial avenues.
“We are looking forward to the next phase of our growth as we invest in new businesses — like insurance, wealth management and lending, while also enabling the next wave of growth for UPI payments in India. This will help propel our vision to provide billions of Indians with financial inclusion,” said PhonePe Founder and CEO Sameer Nigam.
This separation also gives both companies a chance to take advantage of the growing importance of digital payments and eCommerce platforms in India and surrounding countries.
A December PYMNTS report, “The Emerging APAC Opportunity: Local Payment Methods,” found that 40% of international eCommerce retailers plan to expand their presence in the APAC region over the next three years.
The report also found that 33% of local merchants believe lackluster localization of digital payments and eCommerce platforms is only exacerbating cart abandonment rates, meaning there is a growing need for local companies to give online shoppers a user-friendly and locally-minded place to shop.