Digital payments company Paytm announced earlier today that it has raised fresh funds from existing backers, including SoftBank’s Vision Fund, Alibaba’s Ant Financial, Discovery Capital, and new investors including T. Rowe Price Associates. While the company did not officially reveal the financial details of the funding, the Economic Times reported that the company raised $1 billion where T. Rowe Price, and SoftBank and Ant Financials invested $200 million and $400 million, respectively. T. Rowe Price had previously invested in Flipkart. MediaNama has reached out to Paytm for further details.

This takes Paytm’s total valuation to $16 billion, as per the ET report. This is a significant increase from the $10 billion valuation that it had in August 2018, when it raised about $300-$350 million from American multinational conglomerate, Berkshire Hathaway. Paytm said that it was working to launch financial services such as lending, insurance, investments and stockbroking, and would invest Rs 10,000 crore in the next three years to aid financial inclusion.

Why this matters: This fresh series of funding can potentially help Paytm counter the mounting pressure from its UPI competitors such as Google Pay and PhonePe. In May 2019, Google Pay had recorded 240 million transactions and PhonePe recorded 230 million UPI transactions. Paytm meanwhile had recorded 200 million transactions in the same month, according to an ET report.

  • In terms of value of transactions, in May 2019, the money paid through Google Pay was the highest at Rs 55,000 crore followed by PhonePe at around Rs 44,000 crore and Paytm, at around Rs 38,200 crore.
  • Google Pay, claims to have 67 million monthly active users (MAUs) as of September 2019 while PhonePe reported 55 million MAUs. Paytm said that it had 140 million MAUs, but Paytm has payments bank and UPI while Google Pay and PhonePe are UPI-only platforms.
  • Paytm claims to be the majority market shareholder of offline and online merchants, and despite Google Pay, PhonePe and Amazon Pay spending billions of dollars in the last 2-3 years, they haven’t been able to “even touch our [Paytm’s] payments business”, Paytm CEO Vijay Shekhar Sharma reportedly said.

Mounting losses: In FY 2018-19, One97 Communications’, Paytm’s parent company’s, consolidated losses ballooned by 163% to Rs 4217.2 crore as opposed to Rs 1,604.3 crore in FY 2017-18.

  • Sharma has said that Paytm will consider an IPO only after it starts generating cash, which the company expects to happen around 2021.