The Chinese payment market and its local players are frequently mentioned by payments experts, but another large Asian market almost goes unnoticed in the Western press. That market is India. Let’s just take a quick look at some of the impressive metrics for the Indian payments market.
According to the Reserve Bank of India (RBI), the country’s central bank, there are well over 800m debit cards in issue, a number that dwarfs the 50-60m credit cards. There were close to 10b card transactions on all payments cards in 2019. Admittedly this represents lower transactional activity than seen in European or North American markets, but these activity levels are growing considerably year on year. Digitisation of the Indian payments market is further strengthened by initiatives such as the Unified Payments Interface (a real-time payment system regulated by the Reserve Bank of India and developed by the National Payments Corporation of India that facilitates the transfer of funds between two accounts via a mobile platform at a rate of 800m transactions per month) and Aadhaar (a national ID scheme based on biometrics that continuously aims to expand its payments services beyond the initial social benefit transfers; 1.2bn enrolled citizens). With these developments come opportunities.
PayU, the Naspers owned fintech company, is one organisation that is betting on the attractiveness of the Indian market. It made its first major acquisition in 2016 when it bought Citrus Pay, a local payment gateway, and then launched LazyPay in 2017, a deferred payment facility for e-commerce transactions. In 2018, it acquired Wibmo, US-based risk management and authentication solution provider that mainly operates in India and it has now backed this up by acquiring a controlling stake in Paysense, a local provider of short-term digital lending services with 5m users. PayU is estimated to have spent approx. $100m on the acquisition but appears to have promised an additional investment of $200m over the coming two years.
Combining all these assets should allow PayU to build its own platform or ecosystem in the market. The combination of payment acceptance capabilities with a digital lending platform is one of the most relevant trends in the acquiring industry across the globe and PayU is very well positioned to take the lead in one of the most exciting payments markets in the developing world.
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