Paytm Merges Digital Wallet Services With Payments Bank

BENGALURU: One97 communication, the digital goods market place also known for their digital payments provider Paytm are merging their wallet service with the eponymous payments banks after the necessary approvals. These are a new model of banks conceptualized by the Reserve Bank of India (RBI), according to The Economic Times.

The firm also runs an ecommerce marketplace that is expected to function as a gateway for online retail operations of Alibaba, a Chinese ecommerce firm.

It is speculated that Alibaba’s digital wallet Alipay is affiliated with Paytm. This collaboration of Alibaba and its subsidiary Ant Financial hold about 40 pct stake in One97 Communications, having invested about $680 million in the company. 

Vijay Shekar Sharma, founder of Paytm holds a 51 pct share in the payments bank, with the balance owned by One97Communications. According to ET, Sharma has invested 112 crore for his majority stake in the payment bank.

Bhavik Hathi, Managing Director of Consultancy firm Alvarez & Marsal asserted that "Banks have their own mobile wallets, so it should not be a problem for Paytm to have its wallet business merged with the payments bank business. However, in line with regulatory requirements the company has had to segregate its ecommerce business from the payments business.”

Paytm is one of the prominent digital firms who have made the most of the government’s demonetization drive. There has been a drastic increase in the number of users after the demonetization announcement. Paytm claims a transaction of over 5 million on a daily basis with a spike of 120 crore worth of transaction in a single day. 

After the demonetization rule, Paytm was administered closely as there were rumors that Chinese investors are benefitting from the government’s move in India. For this reason, Swadeshi Jagran Manch that has been campaigning against the inflow of Chinese goods into India has stated it will have a keen eye on the relationship between Paytm and Chinese internet company, Alibaba Group. 

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