Indian e-commerce and digital wallet industry is right now undergoing a tremendous transformation, as legendary leaders are questioning the very basic business model and once flamboyant e-commerce portals are on the verge of closing down or getting merged with larger players.
While HDFC Bank’s Managing Director has launched a scathing attack on Paytm, Snapdeal is now reporting losses to the tune of Rs 160 crore month, and may soon merge with Paytm’s e-commerce business.
Paytm is the common denominator here, being accused of running a business with no future, and at the same being coming in to rescue a failing e-commerce business.
HDFC MD: Paytm Has No Future
Just couple of days ago, 7-year-old Paytm compared themselves with 211-year-old State Bank of India, when their founder, Vijay Shekhar Sharma said that while SBI has 202 million accounts, Paytm has 190 million accounts.
It was definitely a path-breaking comparison, which can be described as disruptive, dominating and somewhat egoistic.
It seems that this statement hasn’t gone down well with the legends of banking industry.
HDFC Bank’s Managing Director Aditya Puri has launched a scathing attack on digital wallets, especially Paytm, when he said that mobile wallets have no future in a country like India. Interestingly, both Sharma’s and Puri’s statements were shared during the same Nasscom Summit.
Aditya Puri accused ‘wallets like Paytm’ of running a flawed business, as he said, “You cannot have a business that says pay a Rs. 500 bill and take Rs250 cash-back..”, adding, “Wallets as a valid economic proposition is doubtful.”
He shared that Paytm is right now incurring losses of Rs 1600 crore/year (as per numbers shared by Paytm earlier), and declared that such wallets have no visible future in the market.
His exact quote: “I think wallets have no future. There is not enough margin in the payment business for the wallets to have a future,”
In fact, he directly challenged Paytm, when he said, “Is this wallet any better than mine, other than a cash- back? I don’t have a Rs. 1,651 crore loss. You eliminate the loss, then we will talk,”
Most probably HDFC is upset that their own mobile wallet Chillr failed to take off, whereas a new entrant like Paytm has totally disrupted the market. We are still waiting for Vijay Shekhar’s statement on this issue.