The poster boy of India’s e-payments ecosystem is having a change of heart regarding the entry of WhatsApp into the sector.
For long, Vijay Shekhar Sharma, the founder and CEO of the country’s largest digital wallet Paytm, had expressed his displeasure with WhatsApp Pay—the payment feature of the Facebook-owned instant messaging service. In February 2018, soon after WhatsApp rolled out payments to a closed group of users in India, he had taken to Twitter, accusing Facebook of openly colonising the country’s payment system.
The criticism didn’t stop with the jibe. Sharma even called Facebook, “the most evil company in the world,” in an interview to the Business Standard newspaper in September 2018.
But now, he seems to be swallowing his own words.
“I have learned something amazing about the market, that it needs more players because India’s digital market is not growing at the pace we would have wished for. So more players are welcome,” said Sharma when asked about WhatsApp’s entry into India during an event in Mumbai yesterday (May 14).
Sharma justified his latest change of stance saying he had opposed the Mark Zuckerberg-owned company only because it was not compliant with Indian laws.
India’s central bank, the Reserve Bank of India (RBI), had notified that all payment firms must store their data locally from Oct.15, 2018. WhatsApp has taken more time than other global players like Amazon and Google to adhere to the rules, which has even led to a delay in the full-fledged rollout of WhatsApp Pay. However, earlier this month, it committed to the country’s top court that it is ready to comply with all data localisation norms.
“I have been saying that people who have not been complying with the law of the land should not be welcome and it is still the same, if someone is complaint they are welcome,” Sharma said in Mumbai.
But Sharma’s opposition against WhatsApp had started as early as February 2018, months before data localisation was made mandatory.
Paytm and its rivals are competing for a greater share of India’s digital payments pie, which is expected to grow to $500 billion (Rs35 lakh crore) by 2020, according to the Boston Consulting Group.
Meanwhile, the Alibaba-backed Paytm is trying to clean up the mess in one of its own companies.
Earlier this month, it unearthed a fraud worth over Rs10 crore in Paytm Mall, its e-commerce arm. Since then, it has delisted over hundred sellers and over 10 employees who colluded to siphon off the money by gaming the cashback offers during the Diwali festival season last year. The company has already roped in auditing firm EY to look into the issue.
“After Diwali, what my team saw was that there were some small sellers who were getting large percentage of the cashbacks and we as a team asked our auditors to do a deeper audit,” Sharma said.
The cashback model has been criticised by several experts, who say it is not sustainable in the long run. But the money-back offers are the lifeline of Paytm, attracting many users to it. Paytm also launched its first credit card in association with Citibank on May 14, where, again, a 1% cashback that it will offer is touted as its most attractive feature.