SoftBank, Ant Financial Back India’s Paytm With $1B Funding

India’s mobile payments startup Paytm said on Monday (Nov. 25) that it secured $1 billion in new funds from Japan’s SoftBank and China’s Alibaba affiliate Ant, The New York Times (NYT) reported, citing a source. The deal values Paytm’s parent company, One97 Communications, at $16 billion.

Other investors include Discovery Capital and T. Rowe Price. The new funds will help Paytm expand its service offers to include investments, insurance and loans. The company said over the next 36 months it is planning to invest 100 billion rupees ($1.4 billion) to create new services for its users.

“This new investment by our current and new investors is a reaffirmation of our commitment to serving Indians with new-age financial services,” Paytm founder and chief executive Vijay Shekhar Sharma said in the statement to NYT.

The Noida-based company told The Wall Street Journal (WSJ) the funds would also be used to improve its services for rural Indians, many of whom are just getting online for the first time. Affordable smartphones and mobile plans attracted global investors.

Paytm says it is India’s biggest mobile payments platform, with more than 50 million accounts and having partnerships with worldwide merchants in more than 2,000 cities. Rivals are closing in, however, led by Alphabet’s Google Pay and Walmart’s PhonePe.

GooglePay has become the fastest-growing platform in India since launching there in 2017. Amazon also offers a payments service in India, and Facebook’s WhatsApp has one in the works.

Mobile payments in China are expected to almost double, reaching $450 billion annually by 2023, a 2018 report from Morgan Stanley indicates.

The market for Indian digital payments could go as high as $1 trillion by 2023, some analysts forecast. Cash, however, still makes up about 70 percent of all transactions in the country.

“India is a large market,” Kunal Pande, head of financial services risk consulting at KPMG, said last month. “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.”