PayPal ‘cashing’ in on Indian start-ups

Global digital payments company PayPal is betting big on India’s booming digital payments space. The San Jose, California-based company said it is incubating Indian start-ups in areas such as fintech, artificial intelligence and big data to drive innovation.

PayPal, which runs an incubator at its technology centre in Chennai, said that having a foothold in the Indian start-up environment was helping the company to spurt innovation internally and also contribute back to the start-up ecosystem.

“We have to make sure, we are not thinking (only) about what we are doing,” said Chandramouliswaran V, senior director, Enterprise Data Services and site lead for PayPal in Chennai, in a telephone interview. “But we also need to have an eye [to see] what is happening around us. That always keeps us charged up and awake and makes sure we continue to innovate,” he said. Started in 2013 in partnership with The Indus Entrepreneurs (TiE), the incubator programme offers young firms technology counsel and mentorship. This includes infrastructure support and networking opportunities for investors and customers. The company said it would also be picking up an undisclosed stake in each of the selected start-ups this year.

Cashless India

One of the successful companies incubated by PayPal is Ftcash, a Mumbai-based financial service firm. Vaibhav Lodha, co-founder of Ftcash, said that apart from introductions to venture capitalists and angel investors, the incubator enabled the company to form a strategic partnership with PayPal. This allowed PayPal transactions to be processed through the Ftcash platform. Ftcash said India had more than 60 million micro-merchants and less than 4% of these merchants had access to digital payments and institutional capital. The company aims to empower these small businesses with digital payments and loans, only using a bank account and a feature phone. It aggregates all payment methods like net banking, mobile wallets, payment cards and PayPal to create an open platform for merchants and initiate digital payments.

“Our big break came with the investment from BookMyShow, which happened when we were still with PayPal (incubator),” said Aravind Ramachandran, co-founder of Fantain, in a statement. The Chennai-based firm helps sports companies, including leagues and teams, use fan data to increase revenue and predictability.

Codemojo, a customer engagement start-up said that PayPal gave it support in terms of mentors, connections and internal pitches. The Chennai-based firm that works in the loyalty and rewards space, said this made its product robust and scale tested. “They (PayPal) are like the highway for any start-up,” said Vijaykrishna Ramanathan, co-founder of Codemojo, in a statement.

India’s digital payments will grow 10 times to touch $500 billion and contribute 15% of the gross domestic product (GDP), according to a joint report by Google and Boston Consulting Group. It said that non-cash transactions will exceed cash transactions by 2023. To capture this opportunity, Google released its own payment app Tez in September. Facebook-owned WhatsApp is gearing to start its payment service in the country. Players such as Paytm, Flipkart-owned Phonepe and Amazon Pay are also jostling for a bigger market share.

In August, PayPal unveiled its newest ‘Innovation Labs’ at the Chennai and Bengaluru Tech centres. The lab is the first by PayPal in India and third after the U.S. and Singapore. The firm said the lab would serve as a platform to promote innovation across diverse fields including machine learning, artificial intelligence, data science and Internet of Things.

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