Paytm‘s parent organization, One97 Communications pumped in Rs 9 crore in its financial services business Paytm Money, last month, according to filings with the Registrar of Companies (RoC).
Although the absolute figures were not disclosed, Pravin Jadhav, Senior Vice President at Paytm, who is leading the new venture, said One97 Communications is the sole promoter of Paytm Money. Internal investment commitment put in the project is quite high as has been pointed out by Jadhav on a previous occasion.
Earlier this month, Paytm Money had received official approval of the capital markets regulator Securities and Exchange Board of India (SEBI) to become a Registered Investment Advisor. Using this license the company can roll out investment and wealth management products.
Paytm Money had stated that the platform was planning a limited rollout of investment products starting with direct plan mutual funds investments with zero commissions.
In the future, the company will also have a separate app, available for both Android and iOS. At present, allows users to sign up for early access by logging on to the website www.paytmmoney.com.
In January, the Pravin said that the company comprised 40 people. However, the company had plans to hire more employees, around 200, in the next four to six months.
Financial services are new market which has not been explored much. Paytm therefore, sees this arena as an avenue for growth.
Also, in this sector, the company would not have to invest in cashbacks to get more customers.
But the cost of marketing and educating the customer still remains.
Other players in the business
Paytm is not the only player aggressively looking at this market. Flipkart-owned PhonePe has also expressed its intentions to set up a different business unit for financial services.
Reports claim that while Flipkart offers its customers financial and payments solutions around the products it sells, such as insurance around products such as smartphones, PhonePe is adopting a different strategy. It is looking to build out a distinctive business unit around financial services, insurance and wealth. PhonePe shall then co-create insurance and mutual fund products in partnership with large financial services firms.
The different approaches by Flipkart and its fully-owned, UPI-based payments arm PhonePe, hints at a broader strategy on Flipkart’s part. The startup is interested in creating large, independent, revenue-generating businesses inside the group like it did with eKart. Similarly, Flipkart, through its strategy, would be banking on PhonePe, being fully aware of the portal’s potential to dominate the booming digital payments and fintech space.