Paytm has sought to disrupt many industries over the last decade — payments, movie tickets, event bookings, and even gold purchases. But it might have just embarked on its most ambitious project yet.
Paytm Money’s beta version now allows users to buy and sell stocks. The announcement was made by Paytm CEO Vijay Shekhar Sharma this Diwali. “Bought my first share in (the) public market using Paytm Money’s share trading beta feature.” he tweeted. A similar announcement was made by Paytm Money MD and CEO Pravin Jadhav.
— Vijay Shekhar (@vijayshekhar) October 27, 2019
The beta version isn’t available to all users just yet, but the announcements indicate that Paytm’s stock buying and selling feature is just around the corner. It will be a momentous moment for Paytm Money — thus far, the company only let users invest in mutual funds, but with its new feature, will also let them buy stocks in individual companies. This would pit Paytm Money squarely against incumbents in the space, like Zerodha, Share Khan, or Angel Broking.
Paytm does have some new innate strengths to take on these companies. Unlike most other brokers, it is a tech company, so it will presumably be able to build a tech infrastructure better than the other players, and will be able to pay more attention to a modern user experience. Zerodha has shown that there was room to innovate in its space — through its combination of cheap rates and a robust user experience, Zerodha managed to beat traditional banks, and emerge as the biggest broker in India. Paytm also has the advantage of having over 300 million users, and will likely have a ready userbase to pitch its stock broking services to.
But while Paytm Money has managed to get itself quite a few users since its launch last year — the company claims to now have 30 lakh users using Paytm Money — the majority are very small investors. Paytm said that 85% of its Paytm Money users do SIPs of Rs. 500 and below, which means that Paytm will not likely get large volumes for its stock broking business from its initial users. Only 2 percent of Indians invest in the stock market, and they at the moment all likely have other brokers; Paytm will need to get these users to switch to its own platform if it would want to capture the higher-value users.
The launch of Paytm Money’s stock trading feature, though, would indicate that Paytm is serious about growing its Paytm Money platform. Paytm is playing the long game with Paytm Money — it currently charges no money for letting users invest in direct plans, but hopes to make its cut when it pitches other financial services to them, including providing loans against mutual funds and the like. It is similar to Paytm’s many other plays, including payments, movie and flight tickets, and its cloud platform. Time alone will tell how it works out, but for now, India’s likely to have another stock buying app very soon.