Payments? Tech Giants See India as Laboratory, Line Up Mega Deals

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Updated: Oct 06, 2020 4:12 PM

While the Jio-Facebook deal has been closed, if the other two deals were to go through, the top three Indian wireless telecom companies will have a partner from one of the top tech companies each

Payment, stockal, jio, facebook, airtel, amazonWhatsApp’s reach in India has doubled from 200 million over the last two years. No other messaging platform comes close.

India’s telecom companies have been inundated with calls from global tech companies in recent weeks.

After trying earlier to expand its presence in India, Facebook’s (NASDAQ: FB) biggest market by subscribers, the social networking giant bought a 10 percent stake in Jio Platforms last month. With the stake, it will now be part of the action when Jio’s mobile commerce juggernaut rolls out.

The ink on the deal had not dried when reports appeared that Google was in talks to buy a minority stake in Vodafone Idea. The two struggling telcos, facing the heat after four years of relentless onslaught from Jio, had decided to merge in August 2018.

Soon, the telephone lines were buzzing at Bharti Airtel too. According to this report, Amazon (NASDAQ: AMZN) was looking to spend $2 billion to pick up a stake in India’s second-largest telecom company.

While the Jio-Facebook deal has been closed, if the other two deals were to go through, the top three Indian wireless telecom companies will have a partner from one of the top tech companies each. According to the Telecom Regulatory Authority of India (TRAI), Jio had 376 million subscribers, while Bharti Airtel had 142 million and Vodafone Idea 118 million subscribers in January 2020.

India as the ‘laboratory’

Jio’s partnership with Facebook could well set the ball rolling well before others can stitch their partnerships. Jio and Facebook will find it easy to tap into the 400 million subscribers that WhatsApp has. If payments using the WhatsApp platform, currently still to be cleared by the regulators is possible, it could set the template for several other economies.

WhatsApp’s reach in India has doubled from 200 million over the last two years. No other messaging platform comes close. If WhatsApp driven payments can succeed in India, it could be taken to other parts of the world. It is still to get regulatory nod to offer the services, though.

Google Pay has already taken the lead in the payments market. It had 75 million users in May against PhonePe’s 60 million. Google Pay has emerged as the clear leader in payments made through UPI, the platform developed for India’s banks and financial services companies. It recorded 540 million transactions in May against 434 million and 515 million in April and March respectively.

Amazon would love to get into the payments market. Its focus has been identifying partners in industries like food delivery, entertainment, and others who can drive high-frequency payments. It has also made equity investments in insurance tech platform Acko and a platform for SME finance, Capital Float. It also works with FlexiLoans to provide collateral-free loans to underbanked small companies that sell on their platform. Add a mobile platform like that of Bharti Airtel, and the offer could be made even more lucrative.

It all boils down to the smartphone!

Learn and expand

If all goes well and it gets the regulator’s nod, Facebook’s $19 billion acquisition of WhatsApp could now begin to yield results. Its investments in online education provider, Byju’s and social commerce firm, Meesho, has been growing well.

The success of Paytm in digital micro payments has changed India’s small businesses and attracted the attention of these global giants. Similarly, in Bangladesh, Grameen Bank’s microloans have been raved about.

If some of the experiments by tech companies, particularly in the payments space, works out well, it could change the access to finance.

As tech looks to solve a mega, global problem, it is clear – small is big!

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