Paytm Eyes $400M For Own Payments Bank Biz

Alibaba-backed eCommerce startup Paytm may be making a serious move into the payments space.

According to sources close to Paytm, the company plans to raise $400 million in the coming months to help support the launch of its new payments venture, Paytm Payment Bank, TechCrunch reported Wednesday (Feb. 10).

The news comes just months after the India-based mobile payments and eCommerce firm reportedly secured nearly $680 million from Alibaba, amounting to a 20 percent buy-in. This closely followed an undisclosed investment by Alibaba and Ant Financial in Paytm earlier in 2015 — funding that reportedly left the Indian company with a valuation of around $1 billion.

“Earlier, we were planning to raise the funding for our payments business separately, [but] now we have decided to raise more funding at a consolidated level,” Paytm Founder Vijay Shekhar Sharma told TechCrunch.

According to Sharma, the decision also has the potential to help Paytm bring in an even higher valuation.

In November, the company announced its intention to drop $764 million into an aggressive expansion plan over the next three years to capture the crown as India’s largest eCommerce player.

Plans for the funding included growing the number of merchants on the Paytm marketplace from the 100,000 as of November to 1 million by 2018. The firm is also looking to expand its payments service into a full-tilt FinServ outfit, with a banking license issued by the Reserve Bank of India. When that is complete, the firm plans to seek an IPO.

“We believe that we’ll be able to bring half a billion Indians into the mainstream of the economy. Alibaba have done it in China, and with their help, we can do it here,” Sharma said.

“We are talking about a couple more years of 100 percent or more year-on-year growth, but once this has settled down and become more predictable, we would like to go public,” he added.

Paytm has since stepped into a competition in earnest as one of India’s eCommerce Big Four, alongside hometown heroes Flipkart and Snapdeal, as well as U.S.-based entrant to the market Amazon.