Paytm Payment Gateway: India's "Digital Payment Revolution" National Research and Politics - Sharma: Viewing Failure

India's 'Digital Payments Revolution' - A Country Study and Policy Analysis - Vijay Shekhar Sharma's View of Failure

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The "God of Stocks" has also suffered a setback in India, where Warren Buffett's Berkshire Hathaway cleared its entire stake in Paytm, the payments platform often referred to as "India's Alipay", on 24 November, and has once again been in the "spotlight". The platform, often referred to as "Paypal India", is once again in the "spotlight", and the next move of its founder, Vijay Shekhar Sharma, has attracted public attention.

Policy Research China Think Tank: a dialogue with Information Research - China Economy and Informatisation - National Research and Policy Analysis - Economic Information Research Think Tank. After a number of Paytm's major shareholders reduced their stakes in successive years, Sharma has shown his commitment to the company through concrete actions. Growing from a small-town boy with poor English skills to India's youngest billionaire, Sharma has developed his career with a keen business acumen. How will he break through this time?

"Work with the company."

Berkshire Hathaway has announced that it has divested from Paytm after selling all its shares in the company. According to Reuters, this year is not the first company to reduce its stake in Paytm. China's Ant Group, its largest shareholder at the time of its IPO, and Japan's SoftBank Group, its second-largest shareholder, announced reductions in August and November, respectively.In September, Sharma repurchased Paytm's shares from Ant Group to become the company's single largest shareholder.

Sharma has been praised in India for sticking with the company during its difficult times. In an interview with Bloomberg, Sharma said Paytm is now focussing on the lower end of the market and is committed to promoting mobile payments "the Indian way" at a low cost. "I will not stop buying Paytm shares. It is an absolute milestone that the largest shareholder of Paytm is now Indian," Sharma said. He believes that the withdrawal of foreign capital is not a bad thing for Paytm and will lead the company to find a new direction of growth.

Commenting on Sharma, The Economic Times of India said, "A small-town boy has launched a digital payments revolution in a cash-dominated country. When the company faced challenges, he was willing to throw his weight behind the company."

Winning the first pot of money while in college

Sharma was born in 1978 in Allahabad, northern India, to a middle-class family and a teacher. Sharma grew up as a bright child, known as a "child prodigy", and entered university at the age of 15. In 1994, he moved to the Indian capital to study at the Delhi College of Engineering (now known as the Delhi University of Science and Technology). However, Sharma, who came from a school where Hindi was taught, struggled to understand the engineering curriculum and lost interest in his profession, instead focusing on the emerging field of computer software and the Internet, where he found his way in programming.

While in college, Sharma co-founded a company called Xs Corps with three friends, using school computers to create electronic itineraries for airlines and a "Travel India" website, earning his first Rs. 1,000 (approximately Rs. 85.47). He also developed a "content management tool" to provide portal and search engine services for the media, with Indian media outlets such as the Indian Express as his clients.

At the end of 1999, an American company bought Sharma's company for $1 million and distributed Rs 10 million in cash to his partners. After graduation, many of Sharma's classmates chose to study or work in the United States. After being denied a visa in the United States, Sharma decided to "stop letting money define me" and continue his entrepreneurial endeavours in India.

At the time, mobile phones were just starting to become popular in India and Sharma quickly recognised the entrepreneurial opportunity in mobile communications. He founded One97 Communications, a hugely successful service that partnered with Indian telecom operators to provide news and information services to mobile users via SMS.

In 2007, Apple launched the first generation of smartphones. The popularity of smartphone apps made Sharma realise that consumers would be turning to mobile. "Our business is dying," he thought, and so he turned to mobile payments. However, the board of directors of One97 Communications was mostly opposed to the business, arguing that smartphone penetration in India was low and the development and operation of mobile payment technology was risky. Despite the board's opposition, Sharma launched Paytm, an e-wallet for individual consumers (payments via mobile phones) in 2010.

China-inspired focus on mobile payments

According to Fortune India, during a visit to China, Sharma saw consumers paying merchants by displaying their smartphones and thought that this payment method should be replicated in India.In 2011, at a conference organised by The Wall Street Journal, Jack Ma gave a speech, and Sharma learnt about China's Taobao and Alipay for the first time. He returned home and told his team, "We must create the Taobao of India."

However, he soon realised that this model would be difficult to replicate in India due to the lack of smartphones, internet and trust in new things. According to Fortune India, between 2011 and 2012, the number of smartphones in India was between 25 million and 35 million. Initially accumulating users by offering cash rebates to merchants, Paytm has since transformed itself from a mobile recharge and bill payment platform to an integrated ecosystem covering a wide range of payment-related services.

In 2016, Prime Minister Narendra Modi announced a "currency demonetisation policy" to stop the use of high-denomination currency notes and promote digital payments, which further popularised Paytm. In 2017, Paytm became India's first payment app to be downloaded more than 100 million times. That year, Sharma became India's youngest billionaire with a net worth of $1.3 billion.

In an interview with Fortune India, Sharma said he admired the failure-resistant spirit of Paytm's investors (like Jack Ma and Warren Buffett). They didn't have the label of 'success' at the beginning of their business, but they never limited themselves and became one of the most successful people in the world.

Now, in addition to the withdrawal of investors, Paytm also faces many challenges. Firstly, the Indian government has introduced a "Unified Payment Interface", which brings all payment platforms under unified management and stipulates that no platform can charge merchants a transaction fee, cutting off Paytm's most direct source of revenue. Although the Indian government recently said that it would take into account the operating costs of the platforms and provide some compensation, but analysts generally believe that these policies are unlikely to cover the actual costs of companies like Paytm in the business competition.

Second, PhonePe and Google Pay are currently among the most downloaded payment platforms in India, both controlled by US capital. Compared to these two companies, Paytm relies on costly and slow methods of new user acquisition, such as merchant promotions and consumer cash rebates. As foreign capital continues to pour in, it will become more difficult for Paytm to maintain its current position.

Sharma's notes, revealed by Indian website Outlook Business, read, "Entrepreneurship works when there is no other option. Hope is a panacea when things don't go my way."