June 13, 2015
The Indian bill payments market is pegged at INR 7.4 lakh crores. Snapdeal, one of the major e-commerce firms in India, and Paytm, a major FinTech firm, are set for a face-off to grab a major slice of the Indian bill payments market.
In India, Paytm is one of the first FinTech companies to offer digital bill and utility payment. Snapdeal, the country's largest online marketplace, is now making an effort to catch up through its $450-million (Rs. 2,900 crore) acquisition of mobile recharge firm FreeCharge in April.
The Delhi-based e-commerce firm has clearly indicated its ambition to build a services platform that will differentiate the company from other online companies. The company has understood that digital payments in India is emerging and has huge revenue potential. The Reserve Bank of India estimates that less than 1% of the 30 billion bill and utility payments handled every year is done electronically.
Electronic payments in India are still largely dominated by Banks. Bill payments related to phone, Internet, gas, electricity, water and insurance premium has seen some level of electronic payment adoption. FreeCharge (now part of Snapdeal) and Paytm are the only two FinTech firms which have processed a significant level of electronic bill payments.
In the last few years, Snapdeal has received multiple investments from Japanese investor SoftBank, eBay and BlackRock while Paytm has also received $575 million from Ant Financial and the Chinese e-commerce giant Alibaba Group.
When asked about the electronic bill and utility payments sector in India, Senior Vice President at Paytm Shankar Nath said to The Economic Times, "It's a high-volume and high transaction business. Payments are upfront, and there is no cash-on-delivery involved. At present 7-8% of Paytm’s customers pays their bills online.
Although both these companies are relatively new to the bill payments industry, they both have been very strong in the mobile and direct-to-home (DTH) recharge segments. Paytm claims to have 50 million Paytm Wallet users, doing over 60 million transactions every month. FreeCharge also claims that it has more than 20 million users. Mobile transactions on the FreeCharge app have grown 60 times over in 2014 driven through more than 10 million app downloads.
Policymakers are in the process of creating a universal system for digital bill payments named The Bharat Bill Payments System. BBPS is an integrated bill payment system in India offering interoperable and accessible bill payment services to customers through a network of agents, enabling multiple payment modes and providing instant confirmation of payment.