India payment service Paytm has almost closed a deal to get $2 billion in a new financing round in preparation for competition with a slew of other payment services, including Facebook’s Libra and Flipkart’s PhonePe.
Bloomberg is reporting that the funding comes from Ant Financial and Japan’s SoftBank Group, among other investors. It will be divided into equal parts between the company’s equity and debt and brings Paytm’s valuation to around $16 billion.
The terms of the deal are still in the early changes and could change. The new deal would push Paytm past companies like Gojek and Grab in value. The company’s founder, Vijay Shekhar Sharma, said he wants to protect the value of the company as newer payment organizations attract capital and users with discounts and bonuses.
The market for Indian digital payments is expected to continue to grow and should hit about $1 trillion by 2023. It’s at about $200 billion right now, and there’s huge potential in the market right now — cash still makes up about 70 percent of all transactions in the country. Neighboring China has a much more advanced payments system, which is worth upwards of $5 million.
“India is a large market,” said Kunal Pande, head of financial services risk consulting at KPMG. “Digital payments adoption is growing quickly, yet there is room for massive growth as users get comfortable transacting digitally. The large business opportunity makes it attractive for both domestic startups and large global players.”
Paytm is the largest digital payment company in the country, and its investors include well known names like Warren Buffett and Softbank Founder Masayoshi Son. In 2016, Paytm got a huge boost when the government got rid of a lot of paper money in an effort to help stymie corruption.
In just a few months, tens of millions of people and businesses in the hundreds of thousands signed up for digital money services.