Alibaba-backed mobile ecommerce player Paytm put out an ad on the front pages of newspapers last week congratulating Indian prime minister Narender Modi for “taking the boldest decision in the financial history of independent India.” Delhi chief minister and Modi rival Arvind Kejriwal blasted the “biggest beneficiary” of the PM’s massive demonetization drive putting up an ad in his praise. But Paytm chief Vijay Shekhar Sharma held his own.
Leaving out the insinuations in the Twitter drama, both Vijay Shekhar Sharma and Arvind Kejriwal are right. It’s hard to think of a bigger push towards a digital economy or a bolder attack on corruption and black money than the Indian prime minister’s sudden announcement to junk high denomination notes and put stringent limits on cash withdrawals from banks and ATMs.
It’s also true that the pain of withdrawing cash from ATMs has turned into a windfall for Paytm. The company announced that its payment network has touched a record 5 million transactions a day and is on the way to processing US$3.5 billion in payments and money transfers. Here are more aftereffects of the PM’s announcement for Paytm:
- 1,000 percent growth in money added to the Paytm account
- 700 percent increase in traffic
- 300 percent rise in app downloads
- 200 percent transaction value compared to earlier average ticket size
- 18 transactions a week per user compared to three per week earlier
Beyond the immediate spike in numbers, this is a fundamental shift in consumer behavior and Paytm was in the right place at the right time to benefit from it. After becoming the payment wallet within Uber, it has forged partnerships with apps and websites across the board, from top ups and bill payments to movie tickets and travel bookings, food ordering, and shopping.
More importantly for the hundreds of millions in India who use cash in their everyday transactions, Paytm has been enabling grocery shops, pharmacies, restaurants, pharmacies, gas stations, and many more to accept payments through its wallet. Its recent acquisition of online-to-offline player Shopsity was a step in that direction. Currently, 850,000 offline merchants accept Paytm, says the company.
“I am very excited to announce that Indian consumers are now using Paytm in more scenarios than ever before. Owing to the overwhelming response, we have set bolder targets in merchant acquisition, and are aiming to onboard 5 million merchants by the end of the financial year,” says Kiran Vasireddy, senior vice president of Paytm.
The online payments disruptor hopes to make India leapfrog into mobile payments without bothering with card payments. To encourage this, it has zero transaction fees for merchants using Paytm. “We also urge banks to reduce the charges for adding money to wallets and facilitate this shift in consumer behavior,” says Nitin Misra, another senior VP of Paytm. Founder Vijay Shekhar Sharma tweets: “We’re working with our courier partners to enable Wallet on Delivery, also known as Paytm on Delivery [POD].”
That’s not all. Paytm is waiting for a final nod from the Reserve Bank of India (RBI) to roll out its payments-only bank. The RBI came out with this model to facilitate online payments and issued licences to 11 such banks. This will enable users to store more money in Paytm and also earn interest. That’s going to be a huge disruptor in banking.
Other digital wallets like MobiKwik have also gained from the PM’s move for a cashless society, but none are in as strong a position as Paytm to cash in.