APRIL 2018 FORBES ASIA | 23AMIT VERMA/FORBES INDIA (2)
Madhur Deora joined One97 and stepped into that posi-
tion in 2016. As an investment-banking veteran, previously
at Citigroup, he already knew Sharma and had worked on the
company’s deals, including its important fundraising eforts.
“Oline merchant payments is one of the fastest-growing busi-
nesses at Paytm,” says Deora. herefore, the logic is: Whether
it’s a consumer who has a track record of honest purchases and
minimal returns, or a seller who has been doing “stable” busi-
ness using Paytm, why should they not get attractive loans?
A 10,000-rupee loan (about $150) for a consumer or a
200,000-rupee loan (about $ 3 ,075) to a seller would not run
smoothly if done in the traditional way. A Paytm user, however,
already has a history of transactions on the platform, and thedigital platform is far more amenable to that quick loan, point
out Paytm ocials. he story is the same when it comes to
the merchant. Paytm’s answer for now is to partner with large
NBFCs (non-banking inancial companies), which provide the
loans, and see their portfolio expand, while Paytm brings in the
tech platform. Paytm has also, in parallel, built the processes
to credit-score its customers and use other analytics for rapid
processing.
Much of 2017 was spent in building one other important
way in which to engage consumers right from when they
receive money from any source—be it their salary or that
quick bit of beer money borrowed from a friend. his was the
Paytm Payments Bank, which within ten months of going op-
erational has already moved to ofer digital and tangible debit
cards to its customers. When its debit card was launched, “we
got orders from 800-plus cities,” says Renu Satti, the bank’s
CEO, who has worked with Sharma for over a decade, includ-
ing the job of running HR operations.
hough currently most of the bank’s 180 million custom-
ers are those who were already mobile-wallet customers, the
bank’s convenience is pulling in new ones too. Unlike tradi-
tional banks, Paytm does not require its savings bank account
holders to maintain a minimum balance.
Besides, India’s payments bank rules place a 100,000-rupee
(just over $1,500) cap on the balance held in an account at a
payments bank at the end of a business day. Paytm is seeking
to turn that into an opportunity to ofer a simple wealth-
management product by partnering with banks to which
excess cash could be moved for more attractive returns. For
now, one gets ixed deposits with IndusInd bank. On-demand
deposits will soon be started, Satti says.
Paytm Payments Bank is also competing with businesses like
Sodexo with corporate ofers. It has added more than 500 busi-
nesses that are giving Paytm’s digital-food wallets to employees,
she says. New packages on reimbursements are in the ong.
he bank will open 100,000 banking outlets along the
same lines it is building its O2O network. So nearby pharma-
cies and groceries will also become banking correspondents.
Salary accounts are expected to be ofered soon, as well. All
this doesn’t mean Paytm will rake in the money anytime
soon. “For players such as Paytm, it will take continuous in-
vestment to make the payments bank sustainable, because the
margins are thin in payments,” says Saurabh Tripathi, a senior
partner and managing director at Boston Consulting Group.
In addition, India as a market ofers its own challenges and
is no comparison to China, points out Tripathi, an expert in
banking and inancial services, who has advised clients on
large-scale change and digital innovation. It is still quite some
way away from being fully or even heavily digitized despite
the big changes over the last two years. Large parts of the
population are poor and digitally illiterate. “here is a huge
diference between India and China. China is so far ahead in
terms of digitization and prosperity,” he says.
With Sayan Chakraborty. Adapted from Forbes India, a
licensee of Forbes Media.FThe Paytm crew: “We are raising a lot of money on the
e-commerce side,” says founder Vijay Shekhar Sharma
(left); VP Amit Sinha (top) and CFO Madhur Deora.