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Facebook’s WhatsApp, which has been working to obtain regulatory approval for payment services in India, is preparing for a full rollout of those services in June, according to a source familiar with the matter.
The partnership with Reliance, announced on Wednesday, will give WhatsApp an internal track on payments for Reliance’s retail unit, which aims to serve tens of millions of small stores across India. You will also be able to link with Reliance’s telecoms business, which has raided the market since its launch in late 2016, and WhatsApp has a huge presence in India with more than 400 million users.
“If anyone had lost sleep when the Facebook-Reliance deal was announced, it must be Vijay Shekhar Sharma,” said a second source, referring to the founder of Paytm.
The source, which has close ties to Reliance and Paytm, declined to be identified to protect business interests.
Compared to other major players in India’s digital payment markets, Paytm is seen as more vulnerable to attack, already lagging behind amid competition from Google Pay from Alphabet and PhonePe from Walmart.
Although it previously attracted investments from companies like Japan’s SoftBank, China’s Alibaba, and the US-based Berkshire Hathaway. The US lacks its own capital wells for financing, putting it at a disadvantage.
Paytm is also not profitable, as its parent company reported a loss of more than $ 500 million in the year ended March 2019.
Launched a decade ago as a platform for mobile recharging, Paytm grew rapidly after transport company Uber mentioned it as a fast pay option. Its use increased further in 2016 when the ban on high-value bills spurred digital payments.
But he underestimated the impact of a state-backed digital payment system that was implemented in 2016. On that network, Google Pay and PhonePe together accounted for almost 80% of 1.31 billion transactions in January. Paytm was a distant third party with around 10%, according to data from payment firm Razorpay.
India’s digital payments market is expected to more than double to $ 135 billion in 2023 from 2019 levels, according to a study by PwC and Indian industry lobby group ASSOCHAM.
However, individual market share can be difficult to assess. Paytm has diversified into services that include insurance and gold sales, movie tickets and airline tickets, and bank deposits and remittances.
Paytm declined to comment.
GOLITICAL OPPONENT Paytm has long seen the threat posed by WhatsApp, and when the messaging service launched a test of its payment services in early 2018, Sharma accused Facebook of “cheap tricks”.
Paytm was also part of a lobbying campaign against American companies for local data storage, a problem that has now been largely resolved, but which had been an impediment to WhatsApp obtaining regulatory approval. With Reliance behind, WhatsApp’s path to final approval for the paid service is now expected to be smooth.
For one, the market is expanding, and sources familiar with the matter say Paytm has seen a surge in transactions as the COVID-19 crisis pushes online commerce.
But the Reliance-Facebook combination represents a Goliath-like opponent, especially given Reliance’s track record in decimating rivals when it entered the telecoms market with Jio Infocomm and ruthless pricing.
“This is a formidable combination of bandwidth and platform so you can easily shake up the payments industry,” said Ashvin Parekh, an independent financial services consultant.
He added that in any hard-hitting battle over digital payments, a telecommunications company like Reliance’s Jio would be hard to beat, as it has a lot more information about consumer data habits and more stores to reach potential customers.
Paytm has raised over $ 3 billion since its founding, with the most recent infusion of $ 1 billion last fall. But if you need more, fundraising now seems much more difficult. SoftBank, its largest investor, has its own problems and has avoided investing more funds in new companies that lose money.
A recent move by India to step up scrutiny of Chinese investments in the country could also complicate any future fundraising effort.
This story has been published from a source of the cable agency without modifications to the text. Only the owner has been changed.
