As the mobile wallet industry gets heated up in the country amidst intense competition, PayPal, world’s leading online money transfer service is planning to launch its own mobile wallet in India.
According to sources familiar with the development, PayPal is seeking to get a Pre-paid Payment Instruments (PPI) licence in India. The company is already evaluating various other methods of market entry in India including investments and acquisition of existing mobile wallets providers.
PayPal had held talks with Freecharge but the talks fell through. The company was also interested in investing in Flipkart’s PhonePe and had held talks regarding the same.
The Reserve Bank of India (RBI) has put on hold the process of considering fresh applications for PPI since September last year till the time it lays down new guidelines for the same. However, two industry sources revealed that PayPal may have already applied for the PPI licence.
Note that Amazon and Pine Labs have already received PPI licences from the government in March. PayPal has also discussed its PPI applications with the industry body, said a source familiar with the matter.
“PayPal is interested in getting a wallet licence and has discussed this with some industry associations,” the source mentioned.
Both PayPal and RBI have not revealed anything about its application seeking a PPI licence in India. PayPal said that the company doesn’t comment on rumours and market speculations, while RBI said that it “doesn’t disclose the status of an application received under the Payments and Settlement Systems Act”.
Why PayPal Wants To Enter India?
The global payments major, PayPal, is currently focused on international remittances and has a lot of users in India too. But the company lacks a domestic product and needs a mobile wallet for boosting its local presence.
In an interview with ETtech, Anupam Pahuja, PayPal India’s head, and Guru Bhat, head of engineering at PayPal, told that while PayPal has 192 million customers in over 200 markets across the world, there is no domestic product in India.
According to some industry players said that they didn’t expect Amazon’s wallet to be an independent player in the market, but said that it could be hygiene process as its major rivals in India (Flipkart and Snapdeal) already have their own mobile wallet services.
An anonymous investor from Fintech said that main idea behind PayPal and Amazon getting mobile wallets of their own would be to retain customers by offering discounts and cash back.
“Wallets are not the best way to transact. But they are easy to implement and the biggest appeal is the opportunity to give cash backs,” said an investor with a VC firm.
As already mentioned, RBI is in the process of laying down more stringent guidelines for the mobile wallets including full KYC norms. Many existing players have already raised their concerns about such guidelines as it will impact their customer acquisition costs significantly.
How will the entry of PayPal into mobile wallets space in India affect the existing players? Only time will tell. But the mobile wallets industry is bound to have interesting times ahead. What do you think?
