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How PayPal Could Grow Its Digital Payments Services in India

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PayPal’s launch of domestic operations in India

Payment processor PayPal (PYPL) has recently launched local operations in India, in a bid to expand its global offerings. Indian consumers will now be able to make payments through the PayPal app at select online merchants. Merchants will also be able to make transactions using PayPal in India. Notably, PayPal has been offering cross-border payments in India for around ten years. The launch of domestic operations will give merchants access to PayPal’s ~200 million customers through the payment gateway. In India, several merchants, including MakeMyTrip, Yatra, PVR Cinemas, BookMyShow, and FirstCry, have joined hands with PayPal to process payments.

PayPal aims to provide value-added services amid competition

Domestic players such as ItzCash, CCAvenue, PayU, Citrus, and Alibaba’s (BABA) Paytm have flooded the online payment market in India. Alphabet (GOOGL)’s Google has also launched a localized payment app in India, aiming to tap into the country’s digital payment space. Global players Truecaller, Uber, and Amazon Pay (AMZN) are also expanding in this market. PayPal’s strategic deal with Visa (V) will offer enhanced services.

PayPal is thereby trying to position itself in India’s saturated digital payment market by offering customer value-added services such as one-touch payment and buyer and seller protection. PayPal has set up a customer service center and on-ground sales team to carry out operations smoothly and support and educate customers.

PayPal’s scope in India

According to Euromonitor International estimates, only 26% of the Indian population used the Internet in 2016. Most of the population (~60%) still rely on cash-on-delivery methods for payment. Nevertheless, with Indian prime minister Narendra Modi’s digitalization efforts, the country’s digital payment market is expected to grow, helping PayPal expand.

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