India’s PhonePe launches zero-tax app store

PhonePe launched its Indus AppStore developer platform on Saturday, promising zero platform fees and no in-app purchase fees, as the Walmart-backed fintech company seeks to woo Android developers in its biggest market for it.

The Bengaluru-headquartered startup, which has amassed over 450 million registered users of its namesake payment app, said developers can start registering and uploading their apps to the made-in-India app store from today. The app store, which PhonePe has also partnered with handset makers to distribute, includes many features relevant to locals, including support for third-party payment systems, 12 Indian languages and a phone number-based login system.

PhonePe will not charge developers for hosting apps for the first year and will move to a “nominal” fee thereafter, the statement said. The company will also not charge a commission on in-app purchases, while Google charges between 15-30%. PhonePe, which leads the UPI payments market in India, said it has set up an Indian team to support developers, easing concerns of local developers unhappy with Google’s delayed responses and U.S. time zone times.

PhonePe’s plans to launch an app store were reported back in April. PhonePe, which has raised $850 million in investment over the past year and acquired IndusOS in 2021 before fighting a legal battle to finalize its purchase of the startup, has been working on an app store for several years and sees it as an important strategic move, according to people familiar with the situation.

The launch of the Indus Appstore Developer Platform comes at a time when many Indian companies and startups have become disillusioned with Google, whose Android mobile operating system is used on more than 95% of all smartphones in the country.

But despite the size of the market, app developers in India have always had to work with only one app store to distribute their programs, Akash Dongre, co-founder and chief product officer of Indus Appstore, said in a statement (although Apple is increasingly expanding its presence in India, its market share in the country remains low).

“Indus Appstore hopes to provide app developers with a robust alternative to the Google Play Store – one that is more localized and provides better app discovery and consumer engagement,” he added.

PhonePe’s attempt is not the first one undertaken by local entrepreneurs to fight what they see as exorbitant fees charged by the Google Play Store. In recent years, many Indian companies have knocked on the government’s door asking for intervention and some have pinned their hopes on an alliance of mini app stores led by Paytm.

The Walmart-backed startup, formerly part of Flipkart, is optimistic that the Indian authorities’ attempt to force Google to adopt third-party app stores and features tailored to local needs, such as real-time analytics, deep insights into industry trends and competitor assessment, will prove more successful than previous attempts.

India is a key overseas market for Google, where the company has invested more than $10 billion over the past decade, as the Android maker seeks to find the next big growth markets outside the US.

A year ago, the company received two antitrust fines in India and was forced to make a number of changes to its agreements with handset makers and other partners. Google’s move came weeks after it warned that changing its terms of cooperation would drive up device prices in the world’s second-largest smartphone market and lead to the proliferation of out-of-control apps that would pose a threat to personal and national security.

For PhonePe, the app store was the latest in a string of moves by the fintech startup as it enters new markets. The $12 billion company launched an e-commerce app this year and last month introduced Share.Market, an app that allows users to open trading accounts and invest in stocks, mutual funds and ETFs.