Paytm to invest Rs 10,000 crore to further financial inclusion amongst underserved users
The company plans to invest USD 1.4 billion to offer services to underserved consumers.
November 30, 2019 / 01:13 PM IST
Paytm has raised USD 1 billion in a funding round led by T Rowe Price, a US-based asset manager. Existing investors SoftBank and Ant Financials invested USD 200 million and USD 400 million respectively. Prevailing investors Discovery Capital and D1 Capital also participated in this round.
The company, which is India’s leading digital payments company, plans to invest USD 1.4 billion to offer services to underserved consumers over the next three years and further their financial inclusion. Founder and chief executive Vijay Shekhar Sharma said the investment was a vote of confidence in Paytm’s commitment to providing Indians with new-age financial services. He stated, “At Paytm, we are committed to bringing half a billion Indians to the mainstream economy by onboarding them in the formal financial ecosystem.”
He also revealed to a daily that the company is in the final process of applying for a general insurance license. Some part of the corpus will be spent on acquisition of customers and merchants in smaller towns in addition to on-boarding online merchants, especially in rural areas.
According to Boston Consulting Group, India’s rapidly growing digital payments segment is likely to touch USD 500 billion by 2020. This explains why tech companies like Whatsapp, Truecaller and Facebook are keen to get into this space, especially in the country.
Currently, market leader Paytm faces stiff competition from Flipkart’s PhonePe, Google Pay and Amazon Pay in the consumer payments segment, and from PayU and Razorpay in the payments gateway business. Sharma wants to decrease spends on incentivising P2P transactions on Unified Payments Interface (UPI) by almost 35 percent. UPI recorded 1.15 billion transactions in October 2019, of which Google Pay, PhonePe and Paytm contributed 85 percent, with the first two owning the market literally.
This is where Paytm can leverage its wide portfolio of services comprising payments bank, digital wallet, Paytm Mall, credit cards, event ticketing, investments and wealth management, and gold services. It is also likely to utilise the freshly raised funds to expand into insurance, lending, stockbroking and investments.