Paym, India's largest digital payments company with 177 million users, is moving quickly to exploit the government's decision to kill the 500- and 1,000-Rupee note. Backed by big-name investors including China's Alibaba and India's Tata, Paym plans to grab a big chunk of what's expected to become a $4.4 billion payments market in a few years. (For more, see also: India Discontinues 500 and 1,000 Rupee Currency Notes.

As part of a concerted campaign to root out corruption, India abolished its larger currency banknotes two months ago. This move is an obvious boon for Paytm as founder Vijay Shekhar Sharma is leveraging it to position his fintech startup as the dominant player in the digital payments space, reported Bloomberg News. And with new data forecasting the mobile wallet market will skyrocket to 300 billion rupees ($4.4 billion) by 2022 versus 1.54 billion rupees last year, according to trade body Assocham and researcher RNCOS, Sharma may very well succeed. 

Digital Payment Migration

Not only did India's decision to eradicate its larger Rupee notes wipe out 80% of its currency in circulation, but it has accelerated the country's citizenry to shift from using paper money to digital payments, said the news outlet. Since the government's decision, Paytm has attracted more than 20 million users. As a result, the company is now the largest in its space in India. (For more, see also: Digital Payments Gain on India's Currency Demonetization.

But even with these favorable auspices, Paytm's Sharma is not taking anything for granted, noted Bloomberg News. That includes Paytm's rivals, many of whom have flooded the market. Because of the strained political relationship between India and China, many of Paytm's homegrown competitors are trying to use Alibaba's (BABA) minority stake in the India startup as a negative against it. 

Not Everyone's Tuned In

Paytm is also wrestling with another problem: many people in India don't have bank accounts. Consequently, the drive to push digital payments into the mainstream is especially challenging, said Bloomberg News.

Sharma concurred. Speaking to the news outlet, he explained the gist of this dilemma. "There are the digitally savvy and then there are those who do not even own a cellphone," he said. "For many of them, it is not just a leap frog but a triple leap frog."

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