The Flipkart-owned payments platform PhonePe is venturing into the offline space where it faces competition from market leader Paytm .It will offer short-term loans and credit to customers along with installing point of sale (PoS) machines for mid-to large-sized offline merchants for a smoother payments process.PhonePe, which was acquired by Flipkart last year, is one of the first companies to have got on board the Unified Payments Interface ( UPI ) where it says it has a market share of 40% of overall transactions. PhonePe started its offline foray from Bengaluru and will go to the top six cities by the end of this quarter. At present, a majority of its transactions come from Flipkart group companies, but it plans to on-board 30,000-40,000 offline merchants this quarter.“We are looking at large players in the offline space and also at merchants who are usually small in size (like tea sellers, etc). We have already partnered with brands such as Barista, Cafe Coffee Day, KFC, Freshmenu and Metro Cash & Carry, among others. We have also enabled interoperable UPI quick-response ( QR ) code-based payments,“ said Pradeep Dodle, head of business development at PhonePe.Paytm, which recently raised $1.4 billion from SoftBank , has been aggressively expanding in the offline space coupled with discounts for customer acquisition and repeat transactions.