As India approaches the fourth anniversary of 2016’s demonetization, the landscape that has defined the country and economy is undergoing a radical shift.
India has heretofore been a cash-based economy, where even consumers shopping online often paid in physical currency via cash on delivery (COD). But several years of a regulatory push have combined with the increasing presence of India’s Unified Payments Interface (UPI) and six months of COVID-19 to markedly reduce Indian consumers’ fondness for “dirty” cash. Coupled with a global spike in contactless payment methods, India is seeing a massive shift away from cash.
“Compared to where we were around the time of demonetization, in terms of scale, we are probably 15 times bigger than we were then,” he said. “That's not too bad.”
If he describes such massive growth as “not too bad,” it begs the question: What would be enough for Deora to consider the progress “exceptional,” or even “good”?
Deora said that while Paytm’s powerful position in payments is critical, it’s only the foundation of what the company is trying to build. He said Paytm started as a payments project, but now has bigger ambitions around building an entire consumer ecosystem where users can manage their lives end to end without having to flip through a host of apps.
“We created our payments product to go wide and deep for customers — they can pay their school fees, order food, order up an Uber,” Deora said. “We made offline payments possible with a use of a standard button. [But] that all takes us to the next logical piece, which at this point starts to look a little bit like a ‘super app.’ The user can take all those payments they can make from the Paytm app and build a hub [to] manage their life issues.”
Building An Ecosystem Beyond Payments
Deora said creating a full commerce ecosystem has largely been about starting with payments and building out expansively from there. For instance, he noted that in the realm of financial services, Paytm is licensed as a bank, an insurance broker, a wealth manager and an equity broker and trader.
Deora said those are all products the company can build out in-house and offer up to consumers in a fully regulated environment. He said that last part is an ability that Paytm’s competitors have frequently undervalued, as they easily find themselves running into a regulatory brick wall.
But Paytm already has a mass of users flowing in for services like bill pay, online ordering or transactions with the 17 million or so offline merchants who use the platform. Deora said that’s meant the natural next step for the firm was to look at what else consumers are already doing and fold that into the app so they can do it even better.
He said that effort led Paytm to expand into entertainment content streaming that has scaled up massively. The company has also developed an online gaming hub where users can play fantasy sports.
And perhaps most critically, Paytm recently opened the app to third-party developers to address all of those niche use cases that consumers need without having to build them all internally.
“We want to open that to the developer ecosystem as opposed to restricting ourselves to use cases that we will build,” Deora said. “Today, we have about 200 developers who are live on Paytm. They don't have to go and acquire users, which they may not want to do because they are a less frequent use case. We let that user enter via Paytm, see what they are looking for, sign in, and that entire middle experience is managed by our developer partners.”
Deora said such an expansive offering is ever more important as the Indian digital commerce landscape becomes more crowded, complex and competitive by the day.
Navigating The New Environment
Google claimed it had concerns about Paytm violating a policy against digital gambling by offering a cash back rewards program. But Deora said that claim still doesn’t make sense to Paytm.
“I don’t know if they confused something in our app with something else,” he said. “It was pretty straightforward that the users did not have to give us any money. We don't think we tripped any policy.”
He said the bigger concern is that it doesn’t matter if Paytm thinks it’s violated Google’s policies, just that Google thought so and has nearly unlimited authority to pull items from the Google Play store. Deora said he recognizes that it’s a tough market out there — one where firms throw some competitive elbows as businesses with rival interests collide as they work to build their own consumer ecosystems. The race is tight, and the race is tough.