Flipkart fintech 2.0: Can super.money strike gold?

Nearly two years after parting ways with digital payments giant PhonePe, the e-commerce giant has unveiled its latest fintech venture, super.money. The move signals a renewed commitment to capturing a slice of India’s burgeoning digital payments and financial services market.

Flipkart’s Fintech Playbook

Last week, Flipkart’s journey into the fintech space took a new turn with the launch of super.money, a payments app that allows users to make UPI transactions and get cashback. This launch is not just another product in Flipkart’s ecosystem; it represents the group’s strategic push to establish a formidable presence in the fintech space.

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On Wednesday, the company doubled down on this strategy by introducing a co-branded credit card in partnership with Utkarsh Small Finance Bank, expanding its financial offering beyond simple payments.

“Flipkart is yet to fully support them. That’s a big deal. PhonePe got that support and achieved massive scale. Flipkart has done it in the past and will have to do it again,” said an investor who follows fintech companies closely, emphasising the scale of the challenge ahead.

Flipkart did not respond to MintQuestions from ‘s regarding their participation and investment in super.money.

India’s UPI ecosystem has witnessed explosive growth, with the country recording 131 billion UPI transactions in FY24, valued at a staggering $100 billion. ₹200 billion.

UPI transaction values ​​have exceeded ₹20 billion for the third consecutive month in July, reaching ₹20.64 billion, following ₹20.07 billion in June and ₹20.44 billion in May.

In July, PhonePe topped the list with 6.98 billion transactions and a 48.3% market share. It was followed by Google Pay and Paytm with a market share of 37% and 7.82%, respectively, according to data from the National Payments Corporation of India (NPCI).

Sikaria has always wanted to build a financial services company. Flipkart offers an ideal way to get started. -A former PhonePe executive

Déjà vu: echoes of PhonePe’s early days

The origins of Flipkart-backed super.money are strikingly reminiscent of PhonePe’s early days. The app is led by Prakash Sikaria, a seasoned Flipkart executive with over nine years of experience, including roles as vice president and senior vice president of growth.

Sikaria’s ambition to build a financial services company within Flipkart’s supportive environment echoes the early days of TelephonePewhich was built by a trio of determined executives from Flipkart’s Bengaluru office.

“Much of PhonePe’s early years essentially consisted of three strong-willed executives (Sameer Nigam, Rahul Chari, Burzin Engineer) sitting in Flipkart’s Bengaluru office and tirelessly building to become the next big thing in fintech,” shared a former PhonePe executive.

PhonePe was incorporated in December 2015 and quickly gained attention when Flipkart acquired it in April 2016. In August 2016, PhonePe partnered with Yes Bank to launch a UPI-based mobile payment app.

By November 2018, PhonePe had surpassed 1 billion transactions and grew more than 5x the following year, underlining the platform’s rapid rise. Today, PhonePe dominates the UPI ecosystem by market share, setting a high bar for super.money to reach.

Flipkart Group, the entity that owns Flipkart.com, Cleartrip, and Myntra, had acquired PhonePe for $20 million, signaling an early effort to establish a presence in the financial services landscape. By December 2022, PhonePe had completed its separation from Flipkart, creating two separate entities with Walmart as the majority shareholder in both companies.

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“Sikaria has always wanted to build a financial services company. Flipkart offers an ideal way to start,” the former PhonePe executive said.

We want to be among the top five UPI players in December. -Prakash Sikaria.

The Flipkart Effect

One of the key advantages of super.money is the vast user base it has across Flipkart Group’s various businesses. With 500 million users on its e-commerce platform and a Myntra monthly active user base of 60 million by 2023, the potential for rapid customer acquisition is significant.

“It’s important to have easy access for the consumer. People open an app and use it for something every day, from shopping to paying. This is how businesses can build frequency,” said Anand Daniel, a partner at Accel.

Flipkart’s ecosystem could provide super.money with a ready-made audience, crucial to generating the frequency and engagement that fintech platforms need to thrive. Moreover, Flipkart’s other businesses, such as its recently launched UPI account on Flipkart.com, complement the group’s fintech ambitions, even if Sikaria insists that super.money’s approach will remain different.

“Today, everyone has a business UPI. Everyone is incorporating UPI into their workflows. They are not creating a UPI-first fintech player, and that distinction will remain,” he explained.

A UPI-first fintech player benefits from easy customer acquisition by facilitating UPI payments on its platform. This approach not only drives growth but also opens up opportunities for cross-selling of financial services, which super.money believes will be the key to monetization over time.

Competition and strategy: creating a niche

super.money’s initial strategy to acquire customers involves offering a payments platform and positioning it against larger players like PhonePe, Paytm and Google Pay.

“We want to be among the top five UPI players by December,” Prakash Sikaria, founder and CEO of super.money, told Mint.

To achieve this goal, super.money would need to overcome significant competition; as of July 2024, the top five UPI players included PhonePe with 6.98 billion transactions, Google Pay with 5.34 billion, Paytm with 1.13 billion, followed by Cred with 142 million and Axis Bank’s apps with 108 million transactions.

Since its beta launch in June, the platform has achieved 10 million transactions and 1 million downloads, indicating an impressive start for a young company. However, scaling in the payments space presents challenges. Payments account for the bulk of business for established players like PhonePe and Paytm, which have spent years building their market share on UPI transactions.

“PhonePe, Google Pay and Paytm have the first-mover advantage in the payments space. They have been around for so long that it is difficult to imagine a new competitor coming close,” said a fintech executive.

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PhonePe’s standalone payments business reported an adjusted profit after tax of ₹710 crore in FY24, compared to a loss of ₹194 crore in the previous year. Paytm, on the other hand, generated nearly ₹900 crore in revenue from its payments business in the June quarter, accounting for about 60% of its total revenue.

However, Sikaria stressed that UPI payments are seen as a channel for user acquisition and engagement, not the end goal. “UPI will only be an acquisition platform. In fact, I don’t want to expand the UPI consumer base beyond 30-40 million. The idea is to keep churning to increase the ARPU (average revenue per user) of the platform,” he said, stressing that super.money is not meant to be a payments-only platform.

“Payment companies are trying to serve 200-300 million users, so that business is key for them. That’s why they also use ad-based models,” Sikaria added, noting that super.money will remain ad-free.

The holy grail of financial technology

According to Sikaria, financial services (including loans and other products such as insurance) are expected to be the main drivers of super.money’s growth. The company aims to monetize by offering financial services to first-time borrowers who have never had an unsecured card.

“If you give a product to someone who has never tried it, they are more tolerant and adoption is better,” Sikaria explained. For every card issued, four applicants are rejected, creating a sizable market for super.money to tap into. The company will continue to target the wealthy demographic.

“If it’s not as premium as CRED and not as mass-focused as banks, then it’s a pretty big market,” the fintech executive was previously quoted as saying. However, expanding financial services comes with its own challenges. In the business lending space, super.money will compete with the likes of Paytm and Bharatpe, while its insurance and other products will face competition from Groww, PhonePe and others.

“Over the next two years, we are looking to solve two aspects of product-market fit (PMF). The first is the growth PMF through UPI rewards and transactions. The second is the monetization PMF through financial services,” Sikaria said.

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The company is already seeing early signs of PMF growth and expects monetization to begin in the coming months, according to the executive.