Paytm, India’s largest digital wallet, is going to spend US$89.6 million to help merchants across India accept digital payments using QR codes.
QR codes, or Quick Response codes, are digital tags that can be scanned by phone cameras to send and receive details like account information. They aren’t very popular in India yet, except for a few instances – like WhatsApp’s web version, which asks users to use a QR to log in.
In China, companies like Alipay and WeChat use QR codes very successfully. For example, users can transfer money to other Alipay members and share or split bills among them using these codes.
Alibaba and its affiliate Ant Financial, which oversees online payment service Alipay, are both investors in Paytm. So it isn’t a surprise that the Indian company is learning from their playbook. There is also increased chatter that Alibaba itself might be interested in either taking over Paytm to enter the India market, or merge it with other Indian investment Snapdeal. In either scenario, it makes sense that Paytm invest in making digital payments as seamless as possible as it builds market share.
“We will have over ten million merchants on our platform before December 2017, which also puts us on the right path to build one of the largest payment networks in the world,” Kiran Vasireddy, senior vice president at Paytm, said.
The company’s QR code-based payment solution is already used by more than five million merchants and accounts for 65 percent of overall transactions, the company said. It got a huge boost with the Indian government’s demonetization move late last year.
Paytm has been investing in building its digital payments network very seriously this past few months. In November, Vijay Shekhar Sharma, founder and CEO of Paytm, also launched a mobile POS to bridge a big gap between card holders and swiping machines across the country – which became all the more important as notes of high denomination were banned.
Paytm launched a service where all a merchant has to do is install the app and use the option to accept card payments. It opens up a window to enter debit or credit card details, just as a customer would do on a website that accepts card payments – even if the customer isn’t a Paytm user.
“This is the democratization of digital payments in the country. The country has 1.48 million card machines right now, by the end of this month, I expect that to become 15 million with the use of Paytm’s mobile POS,” Vijay had said then.
Last month, the company got regulatory approval to become a “payments bank”- mini-banks that cannot give loans or issue credit cards, but can take deposits.
On Monday, the company said it is investing in scaling up manpower, and in educating merchants who are first-time users.