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We are fighting cash not competition: Paytm’s Amit Lakhotia

In 2010, mobile payment platform Paytm entered the market with key offerings in the mobile recharge and DTH recharge space but over the course of last five year it has graduated to the ecommerce space with offering ranging from food, fashion to travel. In conversation with Digital Market Asia, Amit Lakhotia, Vice President of Business at Paytm discusses the business model of Paytm and the digital payment scenario in India.

Commenting on the business model of Paytm, Mr Lakhotia said, “Commerce and payments happen together, globally. Even in India, it takes time to build trust in the minds of the consumers in the country. Consumer don’t shop online only for discounts as it can only initiate action in the market but it cannot be used as a continuous strategy.”

“So, consumers seek value in convenience, trust, the variety of offering, etc. We have been able to service and achieve consumer confidence as they trust us and keep their money with us. This is what we strongly leverage,” Mr Lakhotia added.

Unlike other platforms in the mobile payment space, Paytm seeks to establish itself as a platform where the consumer comes and transacts. It does not rely on the services of a third party merchant for fulfillment of the services. Therefore, the consumer can experience the Paytm brand on the platform itself, according to Mr Lakhotia.

Paytm covers almost 18,000 online destinations under its umbrella which include the likes of Jabong, Airtel, Idea, bookmyshow.com, makemytrip, Cleartrip, Yatra, IRCTC, eBay, and Groupon, among others, said Mr Lakhotia.

“A year and half ago all our revenue was coming from recharges, then it became recharges + payments, and today we are recharges + payments + marketplace. So, new categories are always added as stakeholders in the revenue pie,” shared Mr Lakhotia.

Digital payments in India
“The banking regulator in India has been cognizant of the fact that cash in the system needs to reduce. The final agenda for regulators and digital payments platforms is the same – cash needs to reduce. Regulators are looking from the point of view that electronic payments should work to reduce the pressure on cash and we are looking at it from the consumer convenience point of view,” said Mr Lakhotia outlining the scenario around digital payments in India.

“We push for the big ticket items through mobile payment but small ticket items will continue to be transacted through cash for long time,” he added.

However, the buzz around payment banks and 11 of 41 applicants securing in-principal approval for the same is expected to change the game for lower valued products too as consumers start to see payment banks as a preferred form of payment option.

The Reserve Bank of India has granted in-principal approval to some of the industry barons such as Aditya Birla Group, Reliance Industries, Airtel, Vodafone, among others. Paytm also joined the league of payment banks along with famous industry majors.

Paytm claims that it is trying to build an ecosystem and a product which helps the consumer understand why electronic payments are convenient against cash. “We are not facing any challenges from the regulatory front,” clarified Mr Lakhotia.

“Once the tax-savvy initiatives are in play for three to five years, we can see more and more consumers adopting digital payments. On the merchant side too, there should be incentives to promote digital payments in India,” he added reiterating the positive sentiment around digital payments in India.

“More players joining the digital payment ecosystem is an implication that the pipe is becoming bigger. Many players in the ecosystem are changing the market validation which was not there until now. So a lot of people have started believing in the space which is good from the consumer point of view and us as well on back of growth in the market,” pointed Mr Lakhotia.

Furthermore, Paytm is undeterred by competition from other digital payment options such as Airtel Money, m-pesa, MobiKwik, and Axis Ping Pay, among other. Mr Lakhotia explained, “About 95 per cent of the payments are happening through cash and only three-four per cent via digital wallets. So, our aim is not to fight within the same three-four per cent pie but bring the cash-dependent consumer on the digital platform so there is scope for a lot of players to grow. We are competing with cash, we are not competing against anything else.”

Many payments merchants are employing social media to gain market share in the India ecosystem but Paytm has decided to stay from the noise in the space. “Social media is important from the point of view of building user rating. But we are not looking only at social media because we seek to expand our business beyond the internet audience in India,” he concluded.