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Alibaba Not Ready to Cede India’s Payment Market to Amazon

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Paytm seeking to raise $2.0 billion in additional cash

Alibaba (BABA) is preparing to replenish the bank account of Paytm, the Indian mobile payment provider that is fighting to keep its dominance amid creeping competitive threats from Amazon (AMZN) and many other rivals. Alibaba, SoftBank (SFTBF), and other unidentified investors are planning to inject additional capital of up to $2.0 billion in Paytm to support its expansion and counter threats from competitors, according to a report from the Economic Times.

Paytm is currently the leading mobile payment provider in India. But in this position, Paytm has also become the prime target of competitors, as every provider seeking to expand in India’s digital payment market is looking to take market share from Paytm.

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Alibaba sets sights on $1.0 trillion prize

India’s digital payment market is forecast to grow fivefold in the next few years to reach $1.0 trillion by 2023, according to Credit Suisse predictions.

Amazon has introduced its Amazon Pay service in India, which in addition to facilitating payment transactions, also extends loans to traders. Paytm is also up against Google (GOOGL), which last year expanded its India-specific payment app called Tez to include consumer loans. PayPal (PYPL) launched domestic operations in India in 2017 to position itself better to take on Paytm. Facebook (FB) is also gearing up to challenge Paytm with a mobile payment service attached to its WhatsApp messaging app.

Alibaba owns a 38% stake in Paytm parent One97 Communications. Softbank owns 19%, and Berkshire Hathaway owns 2.9% in the company.

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