After Demonetisation, Payments Bank The Next Big Push For Paytm
Paytm’s payments bank will launch in February this year.
The sudden demonetisation of high-value currency notes in India may have led to a surge in Paytm's customer base, but the challenge will be to maintain or expand customer base while making the transition to the payments bank.
Paytm had added 20 million new customers since the government’s move to demonetise old Rs 500 and Rs 1,000 notes, it said in an earlier media statement.
The company, which recently got the final nod from Reserve Bank of India (RBI) to start its payments bank, is looking to build on the momentum it has gained by converting its current customer base into payments bank customers, said Founder and Chief Executive Officer Vijay Shekhar Sharma to Bloomberg's Betty Liu and Yvonne Man on "Bloomberg Daybreak: Asia".
The push for a cashless economy has also boosted Paytm’s reach into the least penetrated parts of the country. Revenue contribution from towns with a population of less than 1 lakh people has jumped to just under 20 percent so far from 2 percent in the last two months, Sharma said. He expects 0.5 billion new customers to join by 2020, all of whom are potential customers for the payments bank. The payments bank will launch next month, he added.
Paytm’s ‘Lucky Spot’
The Alibaba-backed company has been in a “lucky spot” after it received funding from Chinese e-commerce major and Ant Financial Services Group, Sharma said. Even now, the company sees huge investor interest from countries such as Japan, U.K. and U.S.
Every week we’ve had at least one or two investor meetings for the last three (to) four months... We are thinking whether we should do it (accept investment) post bank launch or much later after that.Vijay Shekhar Sharma, Founder and CEO, Paytm
Alibaba Not A Threat To Data Privacy
Sharma also brushed off any concerns regarding Paytm’s customer data. In a widely circulated video, Meera Sanyal, former CEO of Royal Bank of Scotland in India and a prominent politician, said earlier this month: “We are being pushed to use Paytm which is controlled by the Chinese company Alibaba.”
“Paytm's payments system has no connection to the data technology systems etc. etc., being controlled totally completely with the borders and controlled by the law of the land of India. So there is no compromise whatsoever there..as far as till yesterday is concerned,” Sharma said.
Once the payments bank is launched, the payments and financial services business will become part of the Paytm Payments Bank, a domiciled entity in which Sharma will be the majority shareholder. The concerns about the banking business and the wallet will cease to exist as the payments bank will become a 49 percent subsidiary of the parent company, Sharma said.