SUMMARY
Cash Transaction Is The Competition For PayPal, Not Other Fintech Companies
In a slew of moves made by PayPal, the global digital payments giant is showing its keenness to work towards dominating the Indian market. In a recent conversation with Inc42, Anupam Pahuja, MD of PayPal India emphasised on the fact that PayPal takes the Indian market very seriously.
He said, “Is India important to PayPal? The answer is an absolute yes. Different countries have different regulatory policies. In financial technology that I work in, India is far ahead than any other country.”
Digital payment in India is experiencing an unprecedented jump and according to a Google-BCG Report, it is estimated that India’s digital payments industry would grow to $500 Bn by 2020, contributing to 15% of the country’s GDP. An important driver of this growth is India’s vast smartphone user base which is now the second largest in the world.
According to data released recently by the Reserve Bank of India (RBI), the total transaction value in digital payment in India accounted for $2 Tn (INR 131.95 Tn) in January. Compared to this, December 2017 clocked transactions worth over $1.9 Tn (INR 125.51 Tn).
After starting off in India nearly a decade ago, it did not fare too well presumably because India’s economy was dependent on cash. But post demonetisation, there is a slew of online payment systems that have evolved in India.
Some of the major digital payment modes are Online or mobile wallets, Prepaid credit cards, Debit/RuPay cards, Aadhaar Enabled Payment System, Unstructured Supplementary Service Data based mobile banking, United Payments Interface (UPI), Bharat Interface for Money (BHIM) app, etc. This seems to serve the right pitch for PayPal to start its second inning in India.
Most recently, it started with its domestic operations in India on November 8 of 2017, amidst heavy competition in an already thriving fintech sector in India. PayPal is pitched to battle against Alibaba-backed firm Paytm in India, PhonePe and BHIM, and also with global entrants such as Google and WhatsApp.
However, as Anupam averred, PayPal does not count fintech companies as competition, rather the ‘India’ still being a cash dominant country is more of a challenge. “Despite demonetisation, 90% of the payments in India still happen in cash. But given the encouragements from the Indian government to change this scenario, the road is very very long ahead of us. However, this is a huge opportunity for PayPal in India. We have our focus on India”.
He is convinced that despite an affluent competition in the fintech industry in India, PayPal will increase its opportunities in India because of the market opportunity. He added, “There are many fintech companies in India, but our focus is on the cash transaction and not those companies. We want to work to promote digital transaction.”
Hurdles On The Cards?
Despite the ambitions flagged off by PayPal in India, there are still mighty hurdles that are yet to be identified.
PayPal is aiming to reach the small and medium scale industries in cities and in smaller towns. It has started working on a model of cluster workshops across India. These cluster workshops are in place in smaller towns such as Jodhpur, Rajasthan, etc. and as well as in major cities.
Given India’s diversity in language, can language barriers be anticipated? Anupam explained, “There are different phone lines for merchants and customers for their help. But they are in English considering that the merchants are engaged in foreign exchange. If the merchant wants to transact and reach out to the global market, then English is the way.”
Again, in smaller towns, Internet access is not necessarily good. Anupam said that PayPal will be a relief to small-town merchants and other business people as PayPal is a very light application. So, unlike other apps that ask to be downloaded, PayPal acts the other way. If anyone wants to use PayPal, they don’t necessarily need an Internet. They can use it via SMS also. During the conversation, Anupam also confirmed that PayPal has more than 200 Mn active accounts, global scale and brand recognition.
PayPal’s Chennai office is its biggest development center worldwide. PayPal’s huge global users will also serve as a huge opportunity for Indian merchants in terms of cross-border trade. The company is further relying on its strong global standing to conquer the Indian digital payment market.
Way Ahead
Going ahead, the company is aiming to build over its current product stack to further expand its presence in the Indian digital payments landscape.
In the next five years, Paypal aims to dominate a much larger share than the existing leaders such as PhonePe, Paytm and Amazon Pay, shared Anupam in a recent media interaction.
Recently, PayPal digitised the payment option to avail the FIRC certificate for Indian freelancers. Also, it came up with PayPal.me– a new peer to peer payment feature, earlier in August 2016. With a market capitalisation of $88 Bn, PayPal is further working on localising its technology to increase its user base in the country
As PayPal is making its move to lend more security and reliability to online transactions, it is also working to incorporate more partners under its global umbrella and is securing tie-ups with freelancers and merchants as part of its vital strategic move.
With India’s digital boom, PayPal is leaving no stone unturned to create its immovable presence in the country. India is a huge market for PayPal, not just in terms of ecommerce and customer transactions but in the picture of the rise of startups in India.
India has the third largest startup ecosystem in the world, with the ease of doing business in India, the country is not only going to attract companies from overseas but also the numerous startups which are mushrooming in India will look beyond the shores to expand their businesses. PayPal will surely be looking to tap into this segment.
