The news: Two of India’s largest payment players, Paytm and PhonePe (partially owned by Walmart’s Flipkart), each announced new digital solutions.
- Paytm: The company introduced Postpaid Mini to its buy now, pay later (BNPL) solution, Paytm Postpaid, so customers can take out smaller loans—between INR250 and INR1,000 ($3.40 to $13.50)—that are interest-free for up to 30 days, per Mint. It also lets customers access Paytm Postpaid’s instant credit of up to INR60,000 ($809.40). Both solutions can be used for utility payments and online Paytm Mall purchases. The standard Postpaid service offers a longer-term credit solution with a monthly interest rate from 0% to 3%. Paytm is also exploring an initial public offering with an estimated value between $24 billion and $30 billion.
- PhonePe: Flipkart customers can now pay for their online purchase at delivery with a scannable QR code, per Tech in Asia. Customers who initially chose to pay for their online order with cash can still opt to pay digitally with a QR code instead when the delivery arrives.
Why this matters: The pandemic accelerated India’s digitization—enlarging growth opportunities for players like Paytm and PhonePe.
- The Indian ecommerce market is rapidly growing: In the last year, online shopping has experienced a swift uptake in India, driven in part by COVID-19 lockdowns and other pandemic restrictions. A March 2021 survey found that nearly half of consumers in India preferred online shopping to in-person shopping in the prior 12 months. Helping push that trend were players like Flipkart and Reliance Industries—both of which updated their ecommerce solutions. And expanding Paytm’s payment solution can keep the momentum going by making it easier for consumers to purchase smaller-ticket items online.
- Increasing digital payment solutions adoption: In June 2021, the Unified Payments Interface (UPI)—India’s instant payments system that offers mobile bank-to-bank transfers—broke a new record, hitting 2.8 billion transactions in the month, up from 1.3 billion in June last year. Recent adoption also stemmed from the pandemic, and going forward, solutions like Paytm’s and PhonePe’s can make digital payments more accessible and convenient for consumers to try and eventually adopt.
The bigger picture: Ecommerce and digital payments adoption among India’s vast population makes the country a prime location for payment players like Paytm and PhonePe to broaden their solutions—though they’ll need to compete for market share as the space heats up. For example, Amazon’s BNPL solution has seen tremendous adoption in India, making it a player that Paytm might want to keep an eye on if it wants its own BNPL product to dominate the market.