India Mobile Payment & Fintech Platforms Preparing for IPO

With a huge population and its affinity towards the mobile / smartphones, India is one of the most attractive market for fintech disruption driven by increasing high speed internet penetration. Penetration of digital C2B [Consumer 2 Business] payments (cards, UPI, wallets) is expected to increase multi-fold to touch 1/3rd of the transactions by 2025. UPI payments are expected to grow at ~50% CAGR driven by UPI QR payments for merchants. Debit Cards & Credit cards are expected to grow at ~23% CAGR. Overall share of UPI is expected to increase 50-55% of digital payments by 2025, while cards would be 40-45%.

Sensing this opportunity a decade ago, Vijay Shekar Sharma ventured to found Paytm, the leading mobile payment platform with 150-200 Mn active users and 15+ Mn merchant having adopted the payments channel with 120,000 using its PoS terminals. Ambitions didn’t stop for Sharma backed by Venture capitalists such as Softbank, ANT Financials and even Berkshire Hathway which made Paytm offer bouquet of digital financial products & services – Digital consumer lending, Insurance, wealth management, stock broking / mutual funds and fixed deposits and general banking through its payment bank. Paytm Money is the wealth management arm of Paytm.

India is a unique market in itself. No one size fits all is really suited for Indian Market. Witnessing the huge success of Paytm, Flipkart acquired PhonePe Mobile Payment Platforms in 2015.

PhonePe is currently processing annualized total payments value (TPV) of $180 Bn, with ~500 Mn monthly transactions. PhonePe has currently ~180 Mn+ users. The reliance on parent Flipkart has shrunk, from 50% of monthly transactions to less than 1% today. PhonePe was first to launch on UPI and has extended into news use cases including travel booking, bill payments, financial services etc. The company has also launched Switch which allows users to switch between PhonePe and other apps like food, grocery delivery etc.

PhonePe acquired Zopper in 2018 and entered the offline merchant payment space. PhonePe, through Walmart (which owns Flipkart), is exploring to enter the most lucrative North American market when Washington Regulators give a go ahead to the same.

PhonePe and Paytm till date have sacrificed profits to grow and gain market-share. They are expected to turn profitable in the next 2 years and could potentially see listing in India or Abroad depending on the conduciveness of equity markets in 2023. Paytm is already traded in the grey market at Rs 9,000 / Share.

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