Paytm strikes deal with Alibaba to instill a global roadmap

In exchange, Paytm will facilitate Alibabas payments arm, AliPay, entry into the Indian market via its domestic customer database. Paytm, run by One97 Communications Ltd, has signed an exclusive commercial partnership with Alibaba’s cloud computing arm AliCloud, and will deploy Alipay’s technology via AliCloud (also known as Aliyun).

The agreement will allow the payment instruments of the two firms to be integrated in their existing platforms. For instance, a Chinese customer shopping with Indian merchants will be allowed to pay via Alipay while an Indian Paytm user will have access to Alipay’s existing merchant base in markets such as the US, China, Japan and the UK. The two firms will operate on a commission model.

The partnership comes at a time when the payments services business is heating up across the globe. As online retail becomes a mainstream channel of commerce in India, backed by explosive growth of smartphones, the country is seeing large Internet businesses launch their own payment solutions in order to grab a slice of the nascent but fast-growing payments market. Cab aggregator Ola (run by ANI Technologies Pvt. Ltd) and ecommerce marketplace Snapdeal (Jasper Infotech Pvt. Ltd) are the latest to launch their own mobile wallets.

Paytm’s founder Vijay Shekhar Sharma was one of the 11 recipients of a payments bank licence from the Reserve Bank of India in August, 2015. The company plans to use Aliyun to build its financial services play. Aliyun will also allow the company to have access to Alipay’s expertise in areas such as NFC (near-field communication) and fraud prevention.

Paytm will improve the bank account linked to the Paytm wallet to allow Indian consumers to pay in markets outside India. Once its own payments bank starts operation, this will happen seamlessly via Paytm itself. Paytm will host the data in its data-centres in Mumbai and Delhi.

Paytm, also backed by venture capital firm SAIF Partners, has more than 120 million wallets and sees an average of 60 million transactions in a month: it also has 160,000 merchants on its ecommerce platform.