June 3, 2015
On May 21, 2015, India’s largest bank—State Bank of India (SBI)—signed a strategic partnership with the world’s leading digital payments company, PayPal. SBI Debit cardholders can now use PayPal when they purchase products from overseas e-commerce websites. The tie-up of SBI with PayPal would help cross-border transactions and domestic payments. The partnership will also allow SBI’s Micro, Small and Medium Enterprise (MSME) customers to use PayPal’s secure payment solutions. According to SBI, PayPal and SBI will work together to offer PayPal’s payments solutions to SBI’s MSME customers who can reach PayPal’s 165 million active accounts globally. The partnership will also facilitate overseas funding for the government programmes such as Clean Ganga and Swatch Bharat.
SBI’s advantage from the partnership: SBI’s intention behind the agreement is to increase its presence in the digital space. This would bring new opportunities for the SME customer base. The steps taken by SBI to expand into e-commerce also include partnerships with e-commerce firm Amazon.com (India) and Snapdeal for providing payment and commerce solutions. The bank can keep a check on non-performing assets (NPA) in the SME sector by giving loans to sellers with good access to markets.
PayPal’s advantage from the partnership: India is a strategic market for PayPal. PayPal has a very robust and growing cross-border business in the country. It has a strong engineering workforce based out of India. The partnership will help PayPal work closely with SBI to make it easy for Indian exporters and consumers gain access to a global audience. It is expected that by 2025, the spending in emerging markets will reach $30 trillion. PayPal sees the partnership with SBI as a long-term strategy.
About SBI: India’s largest bank, SBI, has assets worth $ 28.04977 million as of March, 2014.
About PayPal: PayPal has a presence in 203 countries, processes 12.5 million transactions every day and has 165 million active customer accounts.