There comes a moment in every company’s life when it straddles the chasm of what it was, and what it could be. The right steps put it into a position of unassailable strength none of its rivals can challenge. While the wrong ones, well, end up serving as case-studies later on of how small missteps can derail even seemingly unstoppable momentum.

Paytm’s moment started on around 9 p.m on November 8 when PM Narendra Modi announced that Rs 500 and Rs 1000 notes would soon cease to be valid tender. “Demonetization”, though a wrong phrase to describe the government’s move to replace roughly 86% of the country’s currency notes with a newer set, was Paytm’s chasm.

Leading newspapers the very next morning (a mere 9 hours later) had their front pages plastered with Paytm’s full page ads, congratulating the prime minister for “the boldest decision in the financial history of independent India”. Even more newspapers carried the same full page ads the next day too.

Over the next two weeks Paytm, under its ambitious CEO Vijay Shekhar Sharma (who is an investor in The Ken), managed to mostly run through the political and emotional minefield that is “demonetization” in India. In just the first five days after the announcement, it launched multiple new app features; released it in 10 regional languages; launched five different new ads, and crossed over 50 million downloads of its app on Google’s Play Store.

Sure, it drew criticism initially for having used the prime minister’s photo in its advertising and then of using wry humour to hold a mirror to urban Indians complaining about “demonetization”. But there seemed to be just as many who found those ads acceptable, even nice.

Up until the day before yesterday. At a press conference in Delhi Paytm would make its first major misstep.

“Every Indian merchant can now accept Debit and Credit Cards”, it said on Wednesday. How? By getting customers to enter their credit or debit card details into the merchant’s smartphones (which it called an “app POS”) to make payments.

In a world plagued with financial fraud and one where credit and debit card users are constantly educated by banks to never hand over their card details to unauthorized persons, Paytm was touting the very same thing as a breakthrough innovation.

Why would anyone do it? How would Paytm ensure the safety of all customer financial information exposed through this new process? How could it detect, much less prevent, dishonest merchants from installing apps that would run in their phone’s background, silently capturing and storing every detail entered by customers, right down to their transaction PINs and other secret verification codes? Who would bear the risk of inevitable fraud that would crop up?

Meanwhile, banks and point-of-sale machine (POS machines are the ones in which you “swipe” or “dip” your cards while making a payment) companies saw a business threat in Paytm offering this facility free of cost to both customers and merchants.


Rohin Dharmakumar

Rohin is co-founder and CEO at The Ken. He holds an MBA from the Indian Institute of Management, Calcutta and an engineering degree in Computer Sciences from the R.V.C.E., Bangalore.

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