In the burgeoning digital payments industry of India, the global payments player Paypal is investing heavily to grab a piece of the market. The company, however, is facing a tough time in India, batting with the likes of Paytm, Google Pay, Amazon Pay, PhonePe and other online payments services.
For the financial year ending March 31, 2019, Paypal India reportedly faced 3.5X surge in losses despite 2.5X growth in revenue. At the same time, the company’s expenses grew 1.53X, which proved costly.
In FY19, Paypal reported revenue of INR 657.4 Cr, as against INR 261.03 Cr in FY18. At the same time, the company’s expenses were INR 660.26 Cr, as against INR 260.8 Cr in FY18. Further, the company’s losses came to INR 8.13 Cr, as against INR 2.28 Cr in FY18.
A company spokesperson told ET that the losses were mostly on the back of high costs of merchant onboarding, infrastructure expansion and new talent acquisitions as the firm looks to scale-up their presence in the country over the upcoming fiscal years.
“Over the year, we scaled our presence in sectors such as travel, foodtech, fashion and we launched our products with merchants like Myntra, HappyEasyGo, Book-MyShow and MakeMyTrip,” the spokesperson said.
The spokesperson added, “The loss is almost negligible when you look at the revenue growth. It’s a reflection of the investments that we’re making in the market. India is a strategic market for us and we do want to be a leading player in the market. We’ll continue to invest in infrastructure, people and for growing our base.”
After operating in India for almost a decade largely for cross-border transactions, Paypal took a dive into India’s growing digital payments industry and launched domestic operations in November 2017. The company is aiming to reach the small and medium-scale businesses in cities and in smaller towns. It has also started working on a model of cluster workshops across India.
Over the next 12-18 months, Paypal India’s business plan is reportedly to get larger foodtech players on board. Paypal India’s journey as a payments provider for online food delivery started in early 2019. The company led pilot projects with smaller merchants such as Freshmenu and Fasoos, and now a large merchant is proposed to be brought on board by February 2020.
Estimated to touch $500 Bn, India’s digital payments sector is set to contribute 15% of the GDP by 2020. With the UPI revolution, India’s digital payments technology is nearly at par with the global standard, however, there is a huge scope to bridge the cross-border payments gaps.
In 2017, out of global remittances which stood at $633 Bn in 2017, India topped the list with $69 Bn. In 2018, out of $689 Bn, India again topped the list with $79 Bn, followed by China at $67 Bn. So far, 11 Indian banks have signed up for the SWIFT global payments innovation network for the faster cross-border payments services. PayPal and PayU are among other global players who have been providing cross-border payments services electronically.