Ratan Tata is making yet another personal investment in the country's digital economy, this time in mobile pay... Read More

MUMBAI: Ratan Tata is making yet another personal investment in the country's digital economy , this time in mobile payments and commerce venture Paytm. Tata is picking up a small stake in One97 Communications , which owns and operates Paytm , and will also take on the role of an adviser at the Delhi-based firm.

Paytm recently raised $200 million from Ant Financial , Alibaba's payments firm , to bolster its mobile shopping platform. The 76-year-old chairman emeritus of Tata Sons, the holding company of the $100-billion steel-to-software Tata Group, has subscribed to fresh shares of Paytm, which is looking to directly compete with online retailers like Flipkart, Amazon and Snapdeal.

Tata's previous investments in India's fast-growing consumer internet sector include Snapdeal, Urban Ladder, Bluestone and CarDekho. With the addition of Paytm, his portfolio is almost half a dozen strong. Add to that his advisory role at venture fund Kalaari Capital, and he could be branded as a mini venture capitalist.

"I'm happy that someone like him (Tata) has put his faith and trust in our values and mission. There is no better adviser for Paytm," said Vijay Shekhar Sharma, founder of Paytm. "Mobile commerce has taken off incredibly fast. We have done $1 billion in gross merchandize value (GMV) in just about a year of launch of the Paytm wallet and marketplace," Sharma told TOI.

"Paytm's ambition is to build 100 million wallets by this year-end; we already have 25 million active wallets. Our average wallet balance is Rs 150 and we do 1 million transactions a day across our app and other merchants like Uber, BookMyShow, besides others," Sharma said.

The mobile payments space is expected to see heightened action as the Indian central bank plans to dole out payments bank licences soon. Players like Paytm and MobiKwik are among the 41 entities which have applied for the licence. Cash on delivery (COD) currently accounts for around 60% of e-commerce GMV. With the GMV estimated to hit $100 billion by 2020, even if mobile wallets manage to take away 10-20% market share from COD, payment solution companies would process $10-20 billion worth of e-commerce transactions from nearly negligible levels today, a recent Morgan Stanley report said, indicating the growth potential in the sector.