Alibaba is said to be in advanced negotiations to invest in the Indian mobile payments processor Paytm, Reuters reported yesterday (June 30). The amount discussed would be around $600 million, according to undisclosed sources.
Alibaba would then own around 40 percent of the Indian payments company, which would be valued at around $4 billion. The sources declined to be named as negotiations are not public and neither Alibaba nor Paytm commented.
Alibaba’s financial arm, Ant Financial, which runs the Alipay online payment platform, is already an investor in Paytm’s parent, One97 Communications, an Indian digital goods and mobile commerce platform founded in 2000. The agreement, which took place in February, enabled Alibaba to buy a 25 percent stake with a $575 million investment.
Launched in 2010, Paytm is one of the fastest growing Indian eCommerce shopping websites. In April, Paytm had passed 50 million mobile wallets (up from 20 million in January) and is expected to hit 100 million this year, according to Livemint. Its current customers include taxi-hailing service Uber, travel portal Expedia and the apartment rental site Airbnb.
The Paytm wallet’s use is being driven in part by a company campaign to get autorickshaw and cab drivers to adopt it for hassle-free passenger payments. But the Indian mobile payments company also supports money transfers between wallets, as well as wallet-to-bank transfers.
Mobile wallets are still rapidly growing, especially as an alternative to banks, which is due to the fact that despite a population of 1.2 billion, India has only 450 million bank accounts, many of which are inactive.
India is expected to become the third-largest economy in the world by 2030, according to U.S. Department of Agriculture numbers. With this in mind, winning over India’s market is crucial to Chinese and rival big players such as Alibaba, Tencent and Baidu.