recurring revenue opportunity for Paytm that it could upsell existing customers on and attract new users to.Given Paytm's popularity, this credit card could help drive the adoption of credit cards in India more broadly, as penetration remains low.
Fewer than 50 million people in India have a credit card — that's less than 4% of the population. Cash still comprises aroundof India's total transactions by value, making it hard for banks to assess someone's credit score. And for noncash payments, consumers have largely turned to mobile wallets, like Paytm and its competitors, causing credit cards to remain an unpopular payment method.
Paytm could leverage the reach of its mobile wallet to drive credit card penetration, which could open up opportunities for providers across the payments ecosystem. Paytm counts more than 200 million active users, which gives it the potential to issue cards to a substantial number of consumers. Paytm could use the $356 million funding itfrom Berkshire Hathaway last year, which it said it would use to expand its offerings, to partially fund efforts around this credit card.
If Paytm drives significant adoption of its card — it hopes to gain 25 million cardholders in the first few months — it could help along credit card penetration in India as a whole. That would be good news for organizations beyond Paytm itself, as greater credit card adoption could create opportunities for others like POS providers, for example, especially if more merchants want to accept card payments.1. Sign up for the Payments Briefing to get it delivered to your inbox 6x a week.
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Source: WSJ - 🏆 98. / 63 Read more »