Mobile wallet company Paytm will shell out about $100 million from its $575-million war chest, powered by Chinese e-commerce major Alibaba, to achieve a five-fold increase in its seller base in two years. The company envisages a 1-million-strong seller base catering to about 100 million consumers by the end of 2016.
The $100-million fund will be deployed to help the merchants, especially micro, small and medium enterprises (MSMEs), manage their catalogues and inventory, get trained in mobile commerce and streamline payment systems. This apart, Paytm will work with merchants to market their products and provide logistical assistance as and when the need arises.
“We want to remove middlemen from the ecosystem. Often small merchants, constrained to resort to middlemen to sell goods, end up losing money to them,” Vijay Shekhar Sharma, founder and CEO of One97 Communications, the parent company of Paytm, told FE. The company will also grow its 2,100-strong workforce over three times in the next 12 months to support its growth plans. Last month, Alibaba affiliate Ant Financial Services, which runs the Alipay wallet, invested $575 million in Paytm against a 25% stake. One97Communications was valued at over $2 billion, putting it in the same league as e-commerce players like Flipkart and Snapdeal. Sharma and SAIF Partners, which has so far invested about $70 million in the company, continue to remain majority shareholders. Paytm claims to have around 15,000 merchants and about 25 million registered users. Besides, it has about 20 million mobile wallet users.
Following the funding, Paytm will start working with financial institutions to secure loans for the merchants, besides developing credit rating mechanisms. “We can build credit ratings for the SMEs. Credit ratings based on their financial health, what kind of trusted consumer base they have, how are their capabilities to repay the loans. We will also explore different use cases of wallets, like peer to consumer transfer, offline payments where you can go to a store and pay using Paytm wallets,” Sharma said.
The company will start facilitating cross-border e-commerce and penetrate the southeast Asian markets, particularly Singapore. Besides enabling Indian traders sell goods there, Paytm will also work towards getting merchants from southeast Asia and China sell on its mobile commerce platform.
“There are a lot of logistical barriers. AliPay offers a great platform and payment is the first and foremost problem we have to solve for cross-border trade. There is a plan of ours. There is a plan of AliPay,” Sharma said, adding the company may roll out payment solutions in Southeast Asia in the three to six months.
Sitting pretty on a cash pile, Paytm will also look at investing in, or acquiring, companies to augment niche capabilities. Sharma said he was in talks with a few tech companies from an investment perspective at this juncture, and not overt acquisitions.
Paytm had reportedly planned an IPO in 2010 to raise Rs 120 crore, but backtracked later due to market volatility. Sharma, however, ruled out possibilities of an IPO in near future. “We have ample cash. If the need arises, we won’t shy away from raising more funds, but this money will keep us going for sometime. But an IPO is nowhere in the horizon,” he added.