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SoftBank participates in USD 1 billion round in Indian fintech decacorn Paytm

Paytm is now valued at USD 16 billion, making it one of the most valued Asian startups.

Image credit: Avanish Tiwary

As competition in India’s fintech sector from global companies intensifies, pushing the Indian payments firm Paytm lower in the ranks, the company on Monday said it has received USD 1 billion in its Series G round led by US-based asset management firm T Rowe Price along with Discovery Capital and D1 Capital.

Existing investors including Ant Financial and SoftBank Vision Fund with USD 400 million and USD 200 million, respectively, also participated in this round.

With over USD 3.3 billion in funds raised, the company is now valued at USD 16 billion—one of the most valued Asian startups.

With this round of investment, the payments company that also runs an online marketplace Paytm Mall and wealth management platform Paytm Money, will increase its presence in tier 2, 3, and 4 cities.

In a tweet, Paytm founder Vijay Shekhar Sharma said, “Today, we open next chapter in Paytm’s journey of India’s financial inclusion. We commit to invest additional INR 10,000 crore to serve financially unserved / underserved.”

The company currently claims to serve merchants in more than 2,000 towns and cities spanning across 650 districts. According to Paytm, the recent funding will be used to bring mobile enabled financial services to rural India. “The company will invest and support millions of rural Indians towards self-sustainability through job creation,” Paytm said in a statement.

Paytm was one of the first to start the trend of accepting digital payments in India even for a small amount of transactions using QR code technology. It used the easily printable QR code, unique to each business and individual, to accept and pay money using their smartphones.

However, with competition increasing from Google Pay and Walmart-owned PhonePe, it lost its sheen among users. In August 2019, Paytm was in third place for enabling digital transactions through India’s instant money transfer tool UPI (Unified Payments Interface), leaving space for Google Pay and PhonePe for the first and second spots.

Paytm’s parent company One 97 Communications Pvt. Ltd. reported an increase of whopping 163% in its net loss in financial year 2019. Then, a Paytm spokesperson had said the company has spent a billion dollars since 2017 to expand the digital payments eco-system in the country.

SoftBank recently said it will invest in Paytm with a condition that the company goes for public listing in five years’ time, failing which SoftBank will be free to sell its stake to a competitor.

This year alone, the company has diversified into a few more money-making models such as opening up its platform for advertisements, entering the healthcare space to enable payments, and heavily focusing on gaming, among others. Along with increasing revenue streams, Paytm has also consciously reduced giving incentives in the form of cashbacks for peer-to-peer payments or during merchant purchases. Instead, it’s offering coupons that can be used for purchasing tickets or paying bills on its platform.