Pai Platforms, a company backed by Paytm founder Vijay Shekhar Sharma, has launched a shopping app on the Open Network for Digital Commerce (ONDC). While Paytm does not own any shares in Pai Platforms, the 'PaiPai' app has been developed by the fintech major's parent entity One97 Communications, according to its listing on the Google Play Store, which Moneycontrol has seen.
This comes two months after Paytm E-commerce Private Limited rebranded itself as Pai Platforms and acquired Bengaluru based Bitsila, a seller-side platform on ONDC, Moneycontrol reported in February.
PhonePe, a rival of Paytm, launched a new app for shopping on ONDC called Pincode in April last year.
According to industry watchers, Paytm's move to clearly separate out its fintech and e-commerce businesses could also be a result of the Reserve Bank of India's (RBI) action on Paytm Payments Bank Limited (PPBL) over the last few months.
Moneycontrol has sent Paytm queries about the PaiPai app. The story will be updated if the company responds.
One of the major points of RBI's concerns about PPBL was the fintech company's related party transactions with multiple subsidiaries and associates.
Meanwhile, the government-backed ONDC has become an important focus area for Paytm where it sees its next big opportunity.
At an industry event in the national capital last year, Paytm's Sharma said, "Commerce is a natural extension for us. We are committing to sign up at least 10 million merchants on ONDC before 2025 ends."
Sharma had said that 11.8 million users had already shopped on ONDC through Paytm.
"This means that ONDC has already become a significant player in e-commerce. There are around 50 million e-commerce users in India and over a fifth are already on ONDC," he added.
The Paytm founder had also said that ONDC will open up the e-commerce opportunity for a lot of players as it breaks down different parts of a transaction such as seller, logistics, and payment into separate parts. In effect, a single player doesn’t need large amounts of funding to build all the parts to break into the ecosystem.
Paytm E-commerce Private Limited (now Pai Platforms) has already burnt its hand in e-commerce once before when it ran an app called Paytm Mall. It had raised $400 million from investors like Alibaba and SoftBank at a valuation of over $2 billion in early 2018. However, that bet went sour as Alibaba sold its entire stake in the company at a valuation of just over Rs 100 crore in 2022.
However, ONDC has created a renewed interest among tech companies in India to take another shot at e-commerce.
Multiple tech unicorns, such as Ola, PhonePe, Meesho and Shiprocket, have taken a bet on the government-backed ONDC that is aimed at breaking the stranglehold of a few players like Amazon, Flipkart, Zomato and Swiggy on online retail in the country.
Meanwhile, the volume of monthly retail purchases on the ONDC has grown six times in the last six months to hit 3.6 million in March, compared to over 600,000 in September last year, according to people close to the developments.
The total number of transactions on the network in March reached 7.7 million, which includes 4.1 million ride-hailing bookings on the Namma Yatri app. In contrast to retail purchases, monthly ride-hailing has grown only 1.5 times in the last six months — from 2.7 million in September.
The large share of retail purchases in the total monthly transactions stands in stark contrast to early 2023, when it accounted for only 5-10 percent, with the mobility category dominating with 90-95 percent of all transactions.
With ONDC, the government hopes to increase e-commerce penetration in the country to 25 percent in the next couple of years, reaching a gross merchandise value of $48 billion.
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