Cash transaction is the competition, not Fintech companies
PayPal, the global digital payments giant is keen to work towards dominating the India market. PayPal India takes the Indian market very seriously and is willing to take on Tier 2 and Tier 3 cities. The digital payment industry in India is experiencing an unprecedented jump and it is estimated that the industry would grow to $500 billion by 2020 and will contribute to 15% of the GDP of the country. One of the most important drivers of this growth is the vast smartphone user base which is the second largest in the world now.
According to RBI data, the total transaction value in digital payments in the country accounted for $2 trillion in January. In December 2017, it clocked transactions worth more than $1.9 trillion. PayPal started about a decade ago and did not fare well because the economy was highly dependent on cash. But with demonetization, there is a growth of online payment systems that have evolved in the country. Major digital payment modes are online and mobile wallets, Debit/RuPay cards, Prepaid credit cards, Aadhaar enabled payment system and unstructured supplementary service data based mobile banking. Many users also opt for United Payments Interface and Bharat Interface for Money app. This is the right time for PayPal to start its second inning in the country. PayPal started with its domestic operations in the country on November 2017 amidst stiff competition in the already thriving fintech sector in the country. It is pitched to battle against Paytm, which is an Alibaba backed firm, BHIM and PhonePe in addition to entrants like WhatsApp and Google.
PayPal does not countfintech companies as competition, rather India being the cash dependent country is more of a challenge. Even after demonetization, 90% of the payments in the country happen in cash. There is huge opportunity in India given the encouragement from the Indian government. PayPal is aiming to reach the small and medium scale industries in cities and small towns. It is currently working on a model of cluster workshops in the country which are placed in smaller towns like Jodhpur. The biggest benefit of PayPal is that it is a light application; users do not need to download it. If anyone wants to use it, they can also use it via SMS. Currently, PayPal has more than 200 million active accounts. The company is also aiming to build over its current product stack to further expand its presence in the country. It aims to dominate a larger share than the existing leaders like Amazon Pay and Paytm. With the digital boom in India, PayPal is leaving no stone unturned to create an immovable presence in the country. India has a huge market for PayPal in terms of the rise of startups and e-commerce. With the ease of doing business in India, the country is going to attract companies from overseas and there will be numerous startups mushrooming in the country which will look beyond the shores to expand their business.
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