It is not mere coincidence that payments giant PayPal picked 8 November to launch domestic payments in India. For payment companies, both existing and wannabe, the Prime Minister’s decision last year to demonetise 86% of the country’s currency made India the perfect battleground for digital payments.
“Which other country has said it will focus as much on digital payments? So we picked 8 November for launch to send a message that we are as focused on digital payments as the country is,” says Anupam Pahuja, managing director for PayPal India.
Launching on the anniversary of demonetisation seems momentous, but that means PayPal is also one of the last ones (as of now) to join the long list of companies that have announced or launched their payment products. And these are not just any companies. Tech giants like Facebook-acquired WhatsApp, Amazon, Flipkart and Google have made no bones about their payment plans. And all of them, in one way or another, compete for the same user.
PayPal is looking to bring its entire suite of global products to India, right from its wildly successful social payments app Venmo to consumer credit products. And it has set “aggressive timelines” to do that.
In the 10 years that PayPal has been in India, it has operated as a payment gateway, allowing Indian businesses to accept payments from around the world. With the launch of domestic payments, PayPal is taking its product to both consumers and merchants. It is looking to offer its trademark ‘Pay with PayPal’ checkout option on merchants’ sites. To use that option, one would have to first get a PayPal account, and then store their credit card or debit card details for faster checkout.
PayPal in India is trying to solve the same issues consumers have in markets like the US—trust, security and reliability. Solving for that has helped them grow into a $10.8 billion company handling over $350 billion in payment volumes. But as it trains its sights on India, are trust, reliability, and security relevant enough problems to solve?
India not equal to the US
PayPal has become the kind of company it is because of problems markets like the US presented. There is just no authentication process when payments are made through cards as one simply swipes a card and the payment goes through. That’s why US accounts for close to 40% of the card fraud losses worldwide, according to the 2016 Nilson report.
PayPal rose to popularity because it said it would assume all the risk associated with a transaction, resolve disputes and help process refunds. In effect, PayPal aims to give users more confidence to transact with any merchant.
Moreover, the US had another peculiar problem.
