VSS: In the early days, I had assumed that people would give up
on the wallet after you could link a bank account and begin using
UPI. But users are still uncomfortable with linking bank accounts.
There is low penetration of digital money and low consumer trust.
The pecking order in the country is: cash, followed by card, then
wallet, and UPI.
We do more than 600 million merchant payments a month.
All UPI payments together are not even as big as our wallet trans-
action numbers. The whole UPI universe has 110 million registered
users, but less than 10% of them account for more than 80% of
transactions. On UPI, all apps put together have a $150 million
monthly payments volume. We have a total of $390 to $400 million
volume via Paytm through UPI, other wallets, cards, and cash.
After spending billions of dollars, Google Pay and Walmart’s
PhonePe haven’t been able to touch us.
SR: How do you enlist merchants?
VSS: It takes time. Shopkeepers need a lot of hand-holding for
digital payments, cloud services, and everything else. They are
underserved by tech companies. We are currently at 13 million
merchants and will reach 25 million by March 2020. It’s all about
how many cities, how many shops, how many markets
give consumers the chance to use digital payments. We are
very visible in India’s main cities. We are now headed to Tier 3 and
Tier 4 markets.
SR: To transition merchants to digital payments and other digital
services can’t be easy.
VSS: We are offering software where they can create their own
store and start selling online. They can build their business’s credit
score and access our instant business loans. We have leapfrogged
from being a payment company to a complete ecosystem for small
and medium enterprises for their software and financial-services
needs. Our “Business With Paytm” app is in 10 languages. In this
era of zero-margin digital payments, as mandated by the govern-
ment, we have to make money on additional services such as
financial services and cloud services.
SR: Isn’t every digital payments service using cashbacks as a lure?
VSS: Cashbacks are a good thing. They incentivize users and
merchants to try out digital payments. Our cashbacks, by theNobody remembers that I started with old-generation
internet businesses.
SR: Competition is building up in digital payments—Walmart,
Google, and others whose launch is imminent.
VSS: Rivals are spending huge amounts of money, but none of
them have dented our market share. India’s digital payments
market share is expanding. In the next five years, India will be a
much more digitized country. That’s a good thing. As for rivals
spending money, the big giants with the deep pockets never win
the war. Microsoft didn’t win the search war. Search didn’t win the
social war. Social didn’t win the messaging war.
I can bet that none of the above is going to win the digital
payments war. It’s a huge opportunity. There will be many players.
This country could produce the payment player which will go on
to dominate the world. It will be an Indian player, not a Chinese
one. The payments leader of India will build a low-cost, highly
scalable model in an extremely competitive environment. The
winner here can go and win anywhere.
SR: Why is cash still king in India?
VSS: We’ve had the first phase of India’s digital payments journey
with many world players as our rivals. We were the clear leader in
the digital wallet phase.
The second phase began with the United Payments Interface,
which is the tech backbone linking banks and digital payments
players so they can create services quickly and cheaply. Our rivals
are using that backbone for person-to-person money transfers
rather than merchant payments. Our business model is in merchant
payments, in the everyday experience of users paying businesses.
That’s our journey now.
Less than 10% of payments made by users to businesses
is through digital means. We believe merchants should provide
their customers the whole range of options, and that’s what we
offer through the Paytm wallet, which accepts cash, debit cards,
credit cards, UPI-linked bank accounts, and other wallets. A digital
wallet is far more inclusive. Even if a user doesn’t have a bank
account, he can do digital payments.
SR: When UPI was introduced, it seemed that digital wallets
were going to die.
“If you build in India, you can go build anywhere
in the world. What do you think is the first thing an Indian kid learns?
That the bus stop is not where the bus will stop”50