Cashfree Payment Gateway: India's Mobile Payment Market Becomes a "Battlefield" for Chinese, US Investors

India's fast-growing digital payments space has become a battleground for US and Chinese investors. Investors from both countries have invested substantially in the booming sector in India, with Alibaba-backed Paytm competing with Walmart-owned PhonePe. In addition, Google, Amazon and WhatsApp are all launching their own platforms.

Due to lack of access to each other's markets and the intensifying trade war stalemate, investors from the US and China have stepped up their investments in India's fast-growing tech sector. In the first quarter of this year, India overtook China to become Asia's largest fintech venture capital market.In 2018, Chinese investors poured $3.5bn into India's tech industry, and the number of funding rounds they participated in doubled year-on-year.

India has more than 450 million mobile Internet users, expected to reach 667 million by 2022, providing a significant market for U.S. and Chinese companies to compete for dominance in the mobile payments market, said Nandan Nilekani, co-founder of Indian tech giant Infosys. While cash usage remains high in India, the prospect of a large number of new smartphone users turning to digital transactions has attracted foreign investors. Alibaba has emerged as a strong contender in India's digital payments space, while last year, Walmart invested $16bn to buy PhonePe.

This highlights the broader competition between the US and China for market share in India, which has effectively "reshaped" the Indian economy. Chinese internet giant Tencent has invested in a number of companies, including Ola, the main rival to Uber in India. Tencent and Alibaba have also invested in India's online food delivery platform sector. On the other hand, US companies Amazon and Walmart have each invested billions of dollars in e-commerce operations in India.

For Chinese investors, India represents an opportunity to bypass the relatively saturated tech industry at home. For U.S. companies without access to the Chinese market, India's size and relative openness make it the next viable option. Neha Singh, co-founder of data provider Tracxn, said, "It's a very interesting battle."