PhonePe enters stock broking business with launch of Share.Market app

The app will allow users to trade and invest in stocks, mutual funds, and ETFs (exchange-traded funds).

Walmart-backed fintech major PhonePe announced on 30 August its entry into the stock broking business with the launch of its app called "Share.Market". The app will allow users to trade and invest in stocks, mutual funds, and ETFs (exchange-traded funds).

"We launched lending, insurance, and payment gateway businesses recently. We started mutual fund distribution four years back and now we are entering the stock broking business under its subsidiary PhonePe Wealth," said Sameer Nigam, founder and chief executive officer (CEO) of PhonePe.

In 2022, PhonePe acquired two wealthtech platforms, WealthDesk and OpenQ, valued together at $70 million. This acquisition was part of PhonePe's ongoing expansion into financial services beyond payments.

In 2021, PhonePe began the process of entering India's competitive stockbroking business and was awaiting a license from the Securities and Exchange Board of India (SEBI) for the same.

Moneycontrol reported on January 28 that the Walmart-backed company had applied for a mutual fund license from the market regulator, which will allow the company to provide its own mutual funds.

The space is currently dominated by players like Zerodha, Groww and Upstox.

Speaking at the Moneycontrol Startup Conclave 2023, held in July, Nithin Kamath, founder and CEO of Zerodha said that to expand the market, players like PhonePe are needed.

"If anyone could expand the market, it will be PhonePe. For the customer base that PhonePe has it will be great for the capital markets and the users," Kamath said.

This comes five months after PhonePe announced raising an additional tranche of $100 million from private equity firm General Atlantic and its co-investors.

Also read: A new UPI innovation has PhonePe and Google Pay worried

The startup has already secured $100 million from venture capital investors Ribbit Capital, Tiger Global and TVS Capital Funds in February and $200 million in primary capital from Walmart in March.

PhonePe in numbers

Walmart-owned PhonePe, valued at $12 billion, processed nearly 5 billion transactions in a month for the first time in the May-July quarter. It also logged an annualized total payments volume of $1.15 trillion, a top executive of the American retail major said in an earnings call held on 18 August 2023.

PhonePe was hived off from Walmart-owned Flipkart as a separate company last year. The fintech startup is now preparing to list in India. Walmart also said that the taxation due to this business reorganization, which amounted to nearly Rs 8,000 crore, along with settlement expenses in the US due to an opioid crisis, led to a hit to its earnings per share for the quarter.

PhonePe has been launching new services and products.

In June, PhonePe announced the launch of its Account Aggregator (AA) services through its wholly-owned subsidiary, PhonePe Technology Services Pvt. Ltd. (PTSPL). An account aggregator is an RBI-regulated entity that helps individuals access and share their financial information digitally after obtaining their consent. PhonePe had received in-principle approval for the NBFC-AA license in 2021.

In July, PhonePe launched its Point-of-Sale (POS) device, which allows merchants to accept payments via debit cards, credit cards, and UPI. This move makes PhonePe a complete offline payment service provider.

On June 14, PhonePe launched its online payment gateway to serve MSME (Micro, Small, and Medium Enterprises) merchants across the country. It also launched its merchant lending platform, which allows banks and NBFCs to provide access to credit in a completely digital and seamless manner to PhonePe's vast base of over 35 million merchants.