PayTM has grown rapidly due to the demonetisation of the India economy in late 2016. 98% of transactions in India were cash based before the policy was introduced that removed 86% of cash from the economy. Every 500 and 1000 rupee note was removed from circulation, and huge lines were seen across the country at banks when citizens had just a few weeks to deposit their cash before it was rendered valueless.
It now has over 200 million active users in India.
Between November 8th and November 21st 2016, just after the policy was announced, PayTM gained 5 million new users. In the week leading up to November 18th, PayTM announced its transactions from offline shops had grown by 300%. It now processes 7 million transactions every day, which is more than the combined average of credit and debit cards in India.
Much like China, India jumped straight from cash to mobile payments. 70% of PayTM’s transactions come from Android devices, which are incredibly popular in India. 14% come from M Web, 11% from Desktop, 4% from iOS and 1% from Windows Mobile.
Although mobile payments continue to grow in China, India is a relatively new market and has huge room for expansion for Alibaba. Alibaba have sent over 100 of its engineers to PayTM in order to help scale the business. It brings to the business investment, but also its expertise in the market.
By entering the Indian market early, Alibaba has also made it much more difficult for competitors like Tencent to gain a strong foothold in the country. The race for international expansion is competitive, and Tencent will find it tough to find a local investment as good as PayTM.