Cashfree Payment Gateway: India's "Alipay" Finds a Chinese Model

In New Delhi, a small dry fruit shop in India has started accepting mobile scanner payments, with a Paytm QR code displayed at the counter for customers to use. Photo by Zou Song.

"In Silicon Valley, I go to speak; in China, I come to learn," said Vijay Shekhar Sharma, president of Paytm, India's version of Alipay, in an interview with this reporter. He has visited Hangzhou frequently over the past two years, secured two rounds of funding from Ant Financial Services and Alibaba, and aggressively brought in China's mobile payment technology and experience. In his view, companies like Taobao and Alipay, which were born in Hangzhou, have become global models in the field of digital finance, and China's rich experience is worth learning and promoting.

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Development is driven by an unbalanced financial services system.

Two years ago, Paytm, founded by Vijay, was just a website offering mobile phone recharges and simple e-commerce services. Today, it is the world's fourth-largest mobile wallet and India's largest mobile payments platform, with more than 140 million users and a market capitalisation of more than $5 billion.

The fundamental driver of Paytm's rapid growth is India's unbalanced financial services system, Vijay explained, adding that there are currently 20 million credit cards and 300 million debit cards in the Indian market, but only 1.2 million terminals available for use. For a country of over 1.2 billion people, a significant portion of the population is excluded from the financial services system, and many people in rural areas do not even have bank cards. In stark contrast to the slow build-up of the financial system is India's booming smartphone market, which is expected to reach 1 billion users in the next five years.

"We aim to become the largest mobile payments platform in India," Vijay said. With Paytm's expanding functionality, Indians can not only shop and book services through their mobile wallets, but also deposit money into their mobile banks. Migrant workers can use mobile terminals to transfer money to distant family members.

Today, Paytm is present in many parts of India, with services such as taxi services, fuel purchases, cinema tickets and hotel bookings joining the mobile payments trend. However, in a country where cash transactions still dominate, convincing people to scan and pay is no easy task. Indian merchants and customers are still relatively unfamiliar with code-sweeping payments, which is a new experience for them, said Chen Yan, head of Anthem's Paytm programme in India.

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Upgraded co-operation - Chinese companies bring more than just capital.

At first, even Paytm, which is engaged in mobile payment, was sceptical about the popularity of the code-sweeping payment method in China. in early 2015, Chen Yan invited Paytm's entire management team to Hangzhou to witness the convenience and popularity of code-sweeping payment in the streets and alleys.

The fit of business models and philosophies led Paytm to find a template in China, and Alipay, the parent company of Ant Financial Services, saw great potential in the Indian market. Ant Financial and Alibaba invested a total of $680 million in Paytm and assembled a cross-functional team of about 20 people who flew to Paytm's headquarters every week to help enhance the platform's capabilities in terms of transforming its systems architecture, building its risk control system and building its data capabilities.

In terms of system architecture, Paytm's platform processes millions of transactions per day, while China's Alipay can process up to 85,000 transactions per second. In terms of risk control system, India's "Alipay" has only a dozen rules, almost in a "bare bones" state, in the face of increasingly frequent online fraud, the platform operation is very challenging. In terms of payment scenario design, Alipay's more than 10 years of experience provides Paytm with the greatest support. For Paytm's 4,000 to 5,000 employees, China's mobile payment platform is already at the world's leading level, and it's "very cool" to learn from their Chinese counterparts.

After half a year of exploration and integration, India's "Alipay" has not only become more diversified, but also significantly improved the system's carrying capacity and risk resistance. As predicted by the ant gold service India project support team, although the local people's payment habits still need to be cultivated, but today's Paytm and Alipay are very similar to the early days of the commonalities far outweigh the differences.

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Financial inclusion - innovation in the financial system is the only way forward.

Just like the trajectory of Alipay, Paytm's future is not limited to mobile wallets. Expanding mobile banking services and utilising mobile terminals to bring the wider Indian population into the financial system is the next stage of their goal. Dhanesh, head of industrial policy at the Confederation of Indian Industry, said in an interview with this reporter: "Paytm is one of the first Internet financial services companies in India to be authorised to open a payment banking service, which demonstrates the government's support for and focus on India's development in this area." He also analysed that due to the inefficiency of distributing bank cards to the public and the slow expansion of the banking system in rural areas, the best way for India to achieve the goal of financial inclusion is to rely on the mobile Internet, which is the strength of Chinese companies, and the cooperation between China and India can be considered a match made in heaven.

The concept of financial inclusion originated with Muhammad Yunus, Governor of Gleneagles Bank in Bangladesh, who believed that everyone had the right to access financial services. For developing countries to achieve that goal, innovation in the financial system is the only way forward. Innovative cooperation between India and China in the area of finance, especially the use of digital conveniences to make financial services accessible to the people, can be said to have great potential.

Chayan Thomas, Professor of Economics at the Indian Institute of Technology (IIT), said in an interview with this reporter: "China is undoubtedly a world leader in terms of innovation in the digital financial system. China's experience has proved that developing countries can achieve leapfrog development in the financial sector with the help of the Internet." Professor Chayan also emphasised that it is very important for China to practice digital inclusive financial standards in India, and the huge population base and market potential of the two countries will drive this cause to a higher stage; the in-depth cooperation between Alipay and Paytm implies the connection between the Chinese and Indian internet financial systems. (Zou Song)