Money & Banking

PayPal launches domestic payments in India

Varun Aggarwal Mumbai | Updated on January 09, 2018

New geography: Rohan Mahadevan, SVP APAC and CEO, PayPal Pte Ltd, and Anupam Pahuja, Managing Director & Country Manager, PayPal India, at the launch of the company’s India operations, in Mumbai on Wednesday - Photo: PAUL NORONHA

Both merchants and customers can now transact online using the service

American digital payments company PayPal launched domestic operations in India on Wednesday. At launch, Indian consumers will be able to make transactions at select online merchants. Merchants offering PayPal will be able to process both local and global payments through the platform, getting access to PayPal’s more than 200 million customers around the world and in India through a single integration.

PayPal has been offering cross-border payments in India for close to a decade and claims to control a third of the country’s B2C export payments. Now, with the launch of domestic operations, both merchants and customers will also be able to transact using PayPal in India.

However, customers in India will not be able to store any money in their PayPal accounts as the company is yet to receive a prepaid payment instrument (PPI) licence from the RBI.

“We’re coming to India as a value-added payment aggregator, and have the appropriate licences to do that,” said Anupam Pahuja, Managing Director at PayPal India. “As we move ahead, we are looking at PPI licences and regulations very carefully. We will see what the next step is.”

Premium services

PayPal is trying to position itself as a premium payments provider and said its charges would be slightly higher than competitors’, given the value-added services that it’s offering. The company is targeting the e-commerce space in India in a big way and hopes to bring down cash-on-delivery, which stands at about 60 per cent of overall e-commerce transactions in the country at the moment. Cash-on-delivery is a big cost for e-commerce players, and although it has come down significantly over the years, cash still remains king.

While PayPal seems pretty late to enter the crowded payments market in India — where there are already a host of domestic players like Paytm, Itz Cash, CC Avenue and Citrus as well as global players such as Amazon and Google — the company is banking on its value-added services to differentiate its offering. These include one-touch payment, which reduces the checkout time, and buyer and seller protection, which includes a 180-days dispute resolution window, which means PayPal will refund your money if an online seller doesn’t send you the goods you purchased.

Low loss rates

PayPal will also pay the merchant in case the customer doesn’t end up paying for the goods. PayPal said it keeps aside $1-1.5 billion a year as risk management cost to support such services globally. Despite that, the company claims it has among the lowest loss rates of 0.28 per cent.

Rohan Mahadevan, CEO at PayPal Pte Ltd and SVP, General Manager APAC at PayPal, said: “India’s digital payments journey is on a high growth trajectory and we are proud to be a part of it. We are excited about our prospects in a market that is highly inspirational and aspirational.”

According to Pahuja, PayPal will also bring its other merchant products to India including credit and working capital loans for merchants.

In India, PayPal has roped in about two dozen merchants including MakeMyTrip, Yatra, PVR Cinemas, BookMyShow and Firstcry, who will offer the “Checkout with PayPal” option. The service will open for a larger merchant base starting January.

PayPal already has about 2,500 engineers working across four campuses in India, supporting the payment company’s global infrastructure. It has also set up an Indian subsidiary with local call centres and multilingual support. The company expects 35 per cent higher conversion rates for merchants in India compared with other payment providers.

Published on November 08, 2017

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