Paytm Logs Into Forex, Rivalry With PayPal To Extend To Cross-Border Remittance Space


After making its foray into wealth management and insurance services amongst other services Paytm is now eager to set its foot in the foreign exchange and cross-border remittance space under its banking identity Paytm Payments Bank. Media reports claim that it has already received the authorised dealership (AD Category II) license from the Reserve Bank of India.

What does the license do?

Airtel, Fino and Jio Payments bank has also received the license.The license will help the payments banks in becoming full-service financial entities.

Foreign currency dealings are heavily regulated activities and entities have to be licensed by the RBI. While banks are classified under the authorised dealer (AD) I category, all others are licensed under the AD II category. The RBI licenses authorise money changers to offer services of foreign exchange to foreigners travelling in India as well as Indians looking for foreign exchange before embarking on a trip abroad.

Paytm’s future plans

While Paytm will initially start with foreign exchange services, it has plans to enter cross-border remittance services, both outward and inward, as well in near term.

In this space, PayPal will be a major competition for the digital payments company. Also, Singapore based InstaRem recently launched its cross-border outward remittance services in India in partnership with the DCB bank.

What are the feathers in PayPal’s hat?

The global payments giant PayPal is one of the oldest players in the foreign exchange and cross-border remittance space. After rolling back its personal payment services in the 2000s, PayPal was majorly engaged in offering cross-border payment options to merchants in India.

Paytm and PayPal first came at the forefront of the Indian media together in December 2016 when PayPal accused Paytm for registering ‘deceptively similar’ trademark. With no further reports on this, the case still seems to go on.

PayPal once again made its India entry with its domestic payment services platform in November 2017. Expert opinions say that India’s digital payments industry would grow to $500 Bn by 2020, contributing to 15% of the country’s GDP.

PayPal sure wants a part of that while battling with existing players such as Paytm, Google’s Tez, WhatsApp, Flipkart-owned Phonepe, Mobikwik, Payswiff, Freecharge and Amazon Pay.

Paypal also announced its plans to digitise the FIRC(Foreign Inward Remittance Certificate) application process for easing the cross-border inward payments troubles for Indian sellers and freelancers.

How tough would be the competition between the two?

At present, PayPal claims to have over 228 Mn active account holders and is available in more than 200 markets around the world. The PayPal platform that includes Braintree, Venmo, and Xoom, enables consumers and merchants to receive money in more than 100 currencies, withdraw funds in 56 currencies and hold balances in their PayPal accounts in 25 currencies. It also claims to have about 17 Mn active merchants making digital payments.

Both Paytm and PayPal are all set to put up a tough fight. While Paytm is currently the market leader in the domestic payments space, clearly PayPal has a strong hold on the cross-border remittance and foreign exchange space. We need to wait and see how this new expansion by Paytm is going to fare for them.

Also Read: Paytm Mall Raises Rs 2900 Crore From Softbank, Alibaba