Smartphone penetration, increasing awareness about digital payments and secured payment solutions are driving growth for digital payments. The payment industry in India is expected to witness multifold growth in the next few years, helped by the new entrants in the banking and payments space.
Technology is driving innovations in the payment space with mobile money, e-wallets and payment aggregators. Payments have grown to include loyalty cards and prepaid instruments which further widen the scope of payments and their role today.
Digital payments market size in the country is expected to touch $500 billion by 2020, accounting for about 15 per cent of gross domestic product (GDP). It is telling that half of India’s Internet users will use digital payments and that the top 100 million users will drive 70 per cent of the gross merchandise value (GMV), thus, it’s all the more logical to engage in the online payment market.
It’s not easy to become a revolutionary brand in the online financial payments sector, especially if someone wants to float a payments bank. New ideas keep budding and everybody runs out of resources, irrespective of how big or small a businessman they are.
On that note, Bitcoins and promoting its use in India can only happen, if the currency is launched with the consent of the financial regulator in India. But at the same time, lending Bitcoins as of now is not on the agenda of many key payment players in the country.
This sector is also one of the most easily disrupted one, as it is driven by smart technology solutions. For instance, Whatsapp is likely to be one of the new entrants in this category, with its ‘Whatsapp Pay’ feature. However, it hasn’t done any payment yet. It will be its first stint in digital payments, so nothing can be judged as yet.
With digital payments, the clear objective is to serve all kinds of financial sector services. The differentiation will happen on the distribution side. The idea is to create a different kind of experience through phones. Transactions would be seamless. If you think payment banks will offer very high interest rates, or a different kind of payment interface, it’s an illusion, it’s just the same thing.
Many players who got the licenses to set up payment banks in India are backing off but not me. Those players might not have the market expertise or research might have shown this business to be lucrative for them. But if you ask me, as far as Paytm is concerned, we want to offer all sorts of financial services and that is why we continue to have a very high interest in banks.
E-commerce and the online payment space is my preferred sector. And lately, another space I find rather compelling to invest, is O2O (online-to-offline) commerce, as offline commerce continues to expand. The ticketing business, for instance, is a big area where I would like to explore more opportunities. Additionally, there are many good opportunities in the insurance and lending sector as well. Post my recent investment in NoBroker.com, a P2P (peer-to-peer) startup for renting homes in November 2016, Paytm and I can look for more engaging platforms in future.
For young entrepreneurs looking to invest, no doubt financial services will remain a big space. Another great opportunity is electric vehicles as congestion and traffic can be curbed through these. Artificial intelligence and big data opportunities will also be a big area.