BENGALURU: Flipkart plans to invest over Rs 670 crore ($100 million) over the next three years to build an independent digital payments business , aimed at helping India ’s largest online retailer reduce its dependency on cash transactions and grab a slice of the growing market for online payments. The Bengaluru-based company will launch a new product, which will work like a digital wallet while also allowing consumers to pay online without using either a card or a netbanking service, as it will be built on the government-approved technology platform — Unified Payments Interface.To be spearheaded by PhonePe — the payments startup which was acquired by Flipkart in April this year — the product is expected to be ready for use in coming weeks. “This is a long-term strategic bet for us, and we believe PhonePe could become as big as Flipkart one day,” said Binny Bansal, CEO of Flipkart who has identified payments as one of the four key pillars that will drive growth for the Bengaluru-based company.Designed as an omni-channel product, PhonePe will be a container for multiple payment solutions which includes a semi-closed loop wallet and “have a tie up with a large bank for UPI," according to Sameer Nigam, founder of PhonePe who now leads the payments business for Flipkart.These plans come at a critical juncture for the nine-year old company, which is fighting to maintain its dominance in India’s fast growing online retail market. Rival Amazon India acquired Emvantage, and is eyeing the digital wallet space as well. Snapdeal acquired payments company Freecharge last year and Paytm owns a strong digital payment franchise, while others in the fray include Mobikwik.As more Indians begin to pay online, digital wallets have seen a significant surge. Volume of payments through prepaid payment instruments jumped 77% till July this year to Rs 24,124 crore, according to a report by consultancy PwC. By 2019 about 800 million people will have access to online payment options in India, with internet users reaching 900 million.“Building a payment business is not choice but a need today for large online businesses,” said Sreedhar Prasad , a partner for ecommerce at KPMG.For starters, Flipkart’s PhonePe will be available for customers on the parent site and Myntra, as well as for those using the logistics service eKart. It will then be rolled out for use across other digital sites and the ultimate aim of positioning it as an offline payment mechanism, even within kirana stores. Nigam, who spent four years in various roles at Flipkart and was the head of engineering before leaving to launch his own startup in 2015, said the plan is to build a separate digital payment solution for each category that his company aims to target.Payments was one of the key four pillars of business identified by Bansal earlier for the company, the other three include commerce and logistics, where Flipkart already has a headway over its rivals, and the advertising business which has started to take off this year. “PhonePe will focus on building highly India-centric digital payment solutions. We have decided to build a new brand because Phone-Pe is addressing different consumer needs and the brand should reflect the same,” said Bansal.There are global precedents to this, as Chinese e-commerce giant Alibaba’s payments affiliate Alipay was valued at $60 billion earlier this year when it raised $4.5 billion in funding.Several in the industry feel that Flipkart may be late in building a payments business, as players like Paytm already claims a user base of 130 million. Freecharge claims it registers a million transactions daily, growing at 15%.But Flipkart is relying on its registered customer base of 75 million to provide an edge. "Their consumer acquisition strategy will be from Flipkart application and its customers. UPI has potential to kill the wallet business and the need to create a brand presence suddenly goes out of the window," said Amrish Rau, managing director at payments firm Citrus.By creating a unique ID, UPI allows users to pay directly from a bank account to different merchants without the hassle of typing card details, or netbanking or wallet passwords.