Paytm and e-commerce player Flipkart may team up to allow shoppers to access the e-retailer’ platform via the mobile wallet. A senior Paytm executive said if the tie-up was formalised, customers would be able to transact faster and more easily on Flipkart. Deloitte estimates Paytm, with almost 20 million users, is a leading provider of the virtual wallet; Paytm claims it has 80 million users. Flipkart is India’s largest e-tailer with a valuation of close to $11 billion and a gross merchandise value of around $8 billion.
Barclays estimates that payments in India are primarily made in the cash-on-delivery (COD) mode which account for 55% of total payments, followed by credit and debit cards, which account for 30%. In China, on the other hand, payments are made either by e-wallets such as Alipay, which has a 27% share, or credit and debit cards, which account for 44%. However, COD is dominant in countries such as Russia. One reason for this, market watchers say, is that customers are apprehensive of sharing information online.
But since the percentage of returns is higher when customers pay in cash, e-tailers are now offering shoppers the facility of paying by card on delivery; Amazon is one retailer that offers customers this option. About 50% of Flipkart’s deals are understood to be via COD and the e-retailer is probably looking to reducing this share through the Paytm tie-up.
Mobile wallets such as Paytm and MobiKwik are making it easier for customers to transact by doing away with multiple authentication. Accessing money in bank accounts or using credit cards requires customers to follow multiple steps to ensure proper authentication. According to RBI statistics, 21 million credit cards have been issued till date in the country. The opportunity in the payments space is considered to be fairly large with one estimate putting the value of bill payments generated by the top 20 cities annually at Rs 6,22,300 crore. While the use of mobile wallets in the country has been increasing, information on the number of users is not available.
Paytm’s partnership with Flipkart might be just the beginning of e-commerce sites on-boarding mobile wallets for payments; taxi companies like Meru and Uber have tied up with wallets to reduce handling of cash. Interestingly, while Paytm will provide Flipkart users with an alternative payment mechanism, it also has 60,000 merchants on its marketplace. Paytm is expected to benefit from the large value of transactions on the Flipkart site, since it will earn a commission on every purchase that goes through its platform.