Digital payments have become big business in India since the government moved to ban high-value banknotes late last year.
Recently, India’s digital wallet, payment and commerce company, Paytm, announced in a company blog post that it is launching its payments bank on May 23 of this year. The news comes as Paytm received the final license necessary from the Reserve Bank of India (RBI).
The core mission of Paytm Payments Bank, the company said, will be to cater to the financial requirements of the under- and unbanked communities in India — a means to bring a significant population into the country’s mainstream economy. Paytm will move its digital wallet business into the newly incorporated Paytm Payments Bank.
Paytm reportedly sees the payments bank as a “new revenue channel and expects it to make money in two years’ time,” according to a quote from VCCircle.
Paytm currently has some 200 million users in India. In December, a company vice president said that Paytm was doing more transactions — 7 million a day — than all of the combined debit and credit transactions in India.
This is major news for the exploding digital payments space in India, the intricacies and international intrigue of which PYMNTS’ Karen Webster recently wrote on in detail.
Paytm has reportedly been in talks with Japan’s SoftBank since mid-April in the hopes of securing $1.2 to $1.5 billion in cash. If the deal goes through, SoftBank would be one of the Paytm’s biggest shareholders. SoftBank is also the largest shareholder in China’s Alibaba.
SoftBank is looking to unload its stake in India’s Snapdeal in favor of investing in Flipkart — India’s largest homegrown eCommerce player. Paytm may also buy Snapdeal-owned payments rival FreeCharge as part of the deal.
It’s not just in the realm of digital payments where East Asian investors see opportunity in India. American companies looking to break into India’s burgeoning digital marketplace across the board are running up against stiff competition from local startups and their major financial backer, China.