Paytm might have the biggest digital wallet in the country with over 120 million subscribers, but the users haven’t come cheap. The company has revealed that it spent Rs. 588 crore in cashbacks to customers in 2015. Paytm company had incurred a loss of Rs. 372 crore in FY 2014-2015.
Paytm is pushing its digital wallet ever harder as it faces competition from Freecharge, Mobikwik and other wallet providers around the country. Competition in this space is fierce, and all wallet providers are vying to become the biggest player. As differentiation among the different wallets is low, companies have been using cashbacks to lure customers.
Paytm’s founder Vijay Shekhar Sharma says that he envisions a scenario wherein every merchant, trader, shop-keeper and service provider shall have a ‘Paytm bar’ stuck at their premises. Customers would just need to scan this Paytm code, and the amount would be automatically deducted from their Paytm accounts and transferred to the merchants.
Paytm has been trying hard to get its wallet widely adopted by tying up varied kinds of physical stores. The company had launched a partnership with Indian Oil to enable customers to buy petrol thorough its wallet, and it is also experimenting with tie-ups to pay school fees. Freecharge has recently experimented with a tie up with McDonalads, where customers would get upto a 100 rupee cashback at their outlets.
Paytm has also received a nod from the RBI to set up India’s first payments bank. It expects to touch Rs 10,000 crore in deposits in the next three years, building on existing consumer base and a technological and cost-effective setup. While Paytm is definitely at the pole position as far as digital payments in India are concerned, with Rs. 588 crore spent on cashbacks alone, one wonders if this dominance is coming at a prohibitively expensive cost.