Paypal Will Soon Start Domestic Transactions in India; Has Paytm’s Massive Success Inspired Them?


Paypal canvas

More than 100 million users use Paytm wallet for their digital transactions; and it looks like this massive success has inspired Paypal to venture into Indian domestic transaction market. Paypal’s Managing Director and Country Manager for India, Vikram Narayan has infact confirmed this latest development in an interview with The Hindu.

He said, “We are seriously evaluating options on how can we serve the domestic market through our products and services,” adding, “As far as Indian ecommerce is concerned, it is just a start of the journey. We are a long-term player,”

The best thing about Paypal is that, it is uniquely positioned both as a payment gateway and a payment processor, along with acting as a merchant account for some, while some users are happy to treat it as a digital wallet in Western countries. Most of the ecommerce portals in US have a mandatory ‘Pay by Paypal’ option, which has made them extremely popular.

Leveraging their power as a one-stop payment destination, Paypal is aiming to replicate Paytm’s incredible success in the Indian domestic market.

Paypal Working As Per RBI Rules

Few years back, RBI had some issues with Paypal regarding their mechanism of delivering the payments. For instance, after RBI intervened, Paypal had to immediately transfer the payment into users’ bank account. This has ‘limited the scope’ of Paypal in India, as users no longer can treat it as a wallet. But it hasn’t deterred them from expanding into the domestic market.

Since 2011, Paypal has been operating under the guidelines of RBI’s Online Payment Gateway Service Providers (OPGSP) protocol, and even increased transaction limit from $3000 to $10,000 under OPGSP.

Vikram said, “PayPal has established a very solid compliance track record with RBI. We have worked proactively with RBI to help merchants of all sizes tap into the global market more easily by passing on their feedback to RBI,”

RBI’s Role Model: PayPal!

We investigated some previous circulars and notifications from RBI, and it seems that Paypal is their favorite role model.

For instance, in a bulletin titled “Indian Payment and Settlement : Systems Responsible Innovation and Regulation by Duvvuri Subbarao”, RBI has mentioned “For example, there are innovative products like PayPal Virtual Account and Google Wallets etc. which are becoming popular in e-commerce because they are convenient, safe and efficient. Why has something similar not developed in India?”

In another speech: “Retail Payments at Crossroads: Economics, Strategies and Future Policies”, it was mentioned: “There are retail systems that have cross-jurisdictional presence. For instance, card payments, international remittances, PayPal etc.”

In yet another speech: “Central Banking in the New Millennium”, RBI took Paypal’s example: “Technology may be available for digital money and according to Research Study 24 of World Gold Council (Nov.2000), a beginning is already made by what is known as Paypal Payment System, Millicent and Mondex. For wider acceptance it may require an underwriter who issues digital money or a digital bearer certificate.”

Paytm’s Incredible Success Fueling Paypal’s India Plans?

100 million users of Paytm’s digital wallet carry out 75 million transactions every month. With more than 80,000 merchants using Paytm Wallet has 20,000+ cash deposit points.

In the last one year, Paytm has expanded like anything. Some of the new niches which they covered include:

Insurance premium; Hotel bookings; Event ticketing platform; QR Code based payments; Financial services; IRCTC Payments; Delhi Metro Ride; Hyperlocal Business; Travel space; School fees and more.

Paytm has already announced their launch of India’s first Payment Bank; will list 1 lakh+ Chinese vendors and will introduce 10 crore Chinese products starting from Rs 3. For a mass reach, they have intensified their marketing as they are now sponsors of Indian cricket team and were declared as best digital wallet in India.

And the biggest boost came when Ratan Tata invested in Paytm.

Paypal is no doubt influenced and inspired by Paytm, and with their own 173 million customer worldwide across 125 countries, they will definitely want to conquer India.

It is not yet clear as to when Paypal plans to launch their Indian operations, but going by the enthusiasm, it will be very soon. We will keep you updated as more details come in.

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