Alibaba invests more in Paytm to drive further into India

Written by Mildred Leal || 01 Oct 2015

Earlier this week, Alibaba announced it would be investing an additional estimated USD680 million in Paytm, India’s largest mobile payment platform and part of One97 Communications. The investment ups Alibaba's overall ownership to around 40% and shows the e-commerce giant's ambitions to further help develop the mobile commerce and payment industry in India. The money will primarily be used to strengthen the technological platform, customer acquisition and entry into new categories.

Only a few months back, in February 2015, Ant Financial, Alibaba’s payment affiliate known for its service Alipay, invested more than USD500 million on Paytm. This gives a total stake of more than 40% to Alibaba, which seems to be a very strategic and bullish move for the Chinese giant that has been unstoppable since its start back in 1999.

 

The partnership between the two giants would help bring 500 million Indians to the m-market (mobile market) which is shown to be a very promising one. The number of internet user in India has been steadily growing from year to year. It took more than 10 years to increase from 10 million to 100 million, 3 years from 100 to 200 million, and recently only one year from 200 to 300 million users. By June 2015, 352 million had access to internet. From that amount, 60% access the internet through their mobile phones.

Paytm owns 100 million Wallet users carrying out over 75M transactions per month resulting in an annualized transaction value of $750 million. Since its launch on 2014 the mobile commerce platform has approximately 10,000 offline and 16,000 online merchants registered, and targets by end of 2015 to have 100,000. In the case of Alipay they are accepted by a network of 200,000 offline retailers in China and 30,000 outside China. Paytm plans to bring Chinese merchants on India’s mobile marketplace, by using the existing network for its expansion.

It is a win-win deal that will not only bring profits to both parties, but also to those Chinese and Indian small businesses that will now be available to millions of online consumers, now not only in China and not only in India but outside too. This is the first of what will likely be several forays by the Chinese e-commerce giant into adjacent markets. 

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