Indian internet sector is a complex yet attractive ecosystem, which is thriving in India due to over a billion people. The opportunities are unparalleled and the future looks bright. Paytm is the Indian digital payments giant that has moved up the success ladder unlike any other e-wallet and digital payments startup in India. They started out as a competition to Freecharge. Once India’s largest digital payments startup – Freecharge, with a valuation of over $6.5 billion has fallen from the top spot long back and is even struggling to stay in the market. However, the stars changed their position for One97 communications owned Paytm during the last quarter of 2016. This was the time when the Indian government implemented the Demonetisation move overnight. The move by created wreaked havoc in the country as it ruled out much of the higher value currency notes.
After the demonetization move, people started using Paytm as the go-to payments app. Paytm strategically installed the QR codes at numerous small vendors in India; this helped the small business owners to continue their businesses without the need for installing POS machines. Paytm’s success allowed the company to reach out to various foreign markets, the most recent being Japan. The ‘Land of the Rising Sun’ was very cash-based and Paytm aims to make the economy a digital one just like the Chinese and Indian markets.
Statistics of India’s Non-Cash Ecosystem is still not favourable after the demonetization move. It has been noticed that the setting up of a POS machine for any small business is a tedious and expensive process, which they try to avoid. Whereas the Paytm QR code setup is relatively easy and inexpensive. Data shows that the POS penetration in India is very less as compared to the users of Debit Cards. This acts as a hurdle for the card users in India as they do not have much opportunity to use their ATM/Debit/Credit Cards. This is the reason behind the massive popularity of Paytm as they allow these users to add money from their cards to the digital wallet and use it at any small or large shop equipped with the Paytm QR code. The rise of Paytm has allowed the Indian market to look for more options in the digital payments scene such as the Indian Government’s BHIM, Google’s GooglePay and so on.
India is a huge market for Internet-based companies as the number of internet users is growing rapidly. The smartphone market is also exploding in India thanks to the affordable smartphones from Chinese manufacturers and infinite data rates at negligible prices from Indian telecom players. This has given rise to the internet culture in India that the global internet giants are looking towards Indian market for digging out a fortune.
Google is the supreme leader among the Internet companies around the world for an obvious reason. Their web browser – Google Chrome is one of the most popular web browsers around the world and so was in India until 2017. However, this changed in the year 2017, as it was superseded by the Chinese giant Alibaba owned UCWeb’s homegrown UC Browser. Currently, UC Browser controls 51% stake in the Indian browser market. This shows the popularity of Chinese internet companies among the Indian masses.
Paytm’s success has already been discussed above. It needs to be kept in mind that a company cannot grow indefinitely. There always comes a time of growth and then fall. Paytm has been on a growth for over 2 years now but it seems that the coming times are not very favourable due to numerous reasons. Indian market is being flooded with various digital payments app that competes with Paytm. The apps also offer a smoother experience, which attracts customers away from Paytm. Another major reason behind Paytm’s fear is the confusion with the use of Aadhaar data in India. For the past few months the Indian Government, Supreme Court, Media Houses, Technology & Security Experts, Civilians and Media persons are in a constant debate regarding the authenticity of Aadhaar and its uncontrolled use by the digital payments apps such a Paytm. The Supreme Court also ruled in favour of the public where it asked the digital payments apps to remove themselves from the Aadhaar ecosystem.
These confusions and court ruling have compelled Paytm to look for alternate businesses to continue in the Indian market. This is the reason that they were looking towards acquiring UCWeb’s Indian business. The talks were going on between UCWeb and Paytm for a price point of around $400-$500 million. SoftBank-backed Paytm sees an opportunity in using the browser to market its products and acquire a new set of users. These users will generally be the first generation internet users in India. As a comparison, India’s largest e-commerce website has monthly active users of around 15 million whereas UC Browser’s monthly active users are over 130 million. This huge number of visitors on the UC Browser will act as an amazing platform for Paytm’s marketing.
Though the discussions were looking positive for both the companies, on a later stage, UC Web’s India division openly denied any such development. They claim that Indian is their most important market for growth and their strategy is to focus on the growth from a long-term prospect. They have been present in India for over 7 years now and their user base is huge with 130 million monthly active users. This way, UC Web is able to bring a lot of business and through advertisements. The deal would have been utterly successful for the Indian Decacorn – Paytm, in promoting their business further in India and various foreign markets.