Even though the demonetization drive has created a spike in business volume for all the mobile wallet companies in India, Mobikwik’s CEO, Bipin Preet Singh, has accused Paytm (the largest of mobile wallet companies in India) for ‘dumping capital’ to ‘gain customers’. Read more on Paytm
“We must be sensitive to companies, especially those that have massive foreign investments, as they can come into the country, dump capital and gain access to sensitive financial data”, said Bipin Preet Singh.
His cautionary advice were aimed at the mobile wallet sector leader, Paytm, in which the global e-commerce major, Alibaba has a stake of about 40 percent. Bipin Preet Singh also criticized Paytm for providing large discounts to users to gain market share.
“You do not need back-to-back print advertisements during demonetization to gain customers. They give 50 percent cash back on flight tickets and movies. Where is the innovation in that? I think that’s where they have under – performed”, he said.
Bipin Preet Singh said that there should be stricter regulations governing business practices in the mobile wallet sector, such as limits on the amount of cash back that a company can offer. He however, is not planning to take the issue up to a law agency. “Right now, I am putting all my time and energy into expanding my business”, said Bipin Preet Singh.
Mobikwik right now has 40 million users and 5,00,000 merchants. Paytm, on the other hand, has around 164 million users and around 1.5 million merchants. Paytm’s founder, Vijay Shekhar Sharma, has on many occasions, denied allegations that Alibaba has a 40% stake in Paytm and said that Paytm is completely an Indian company. Unable to compete against the big money pumped in by international firms such as Uber and Amazon, more and more Indian companies like Ola and Flipkart have sought the government’s intervention to protect domestic companies by creating and enforcing stricter laws in their respective businesses. Indian startups in 2015, had managed to raise US $9 billion but have so far managed to raise just US $5.5 billion this year.
“For many of these start-ups lobbying with the government to tilt the policies in their favour is the only play left. Next year, we would be looking at a major consolidation and start-ups fearing this are approaching NITI Aayog or other government departments”, said a senior analyst at an international consultancy firm.
This accusation by Bipin Preet Singh comes in the wake of Paytm and FreeCharge announcing upto 100% cash back offers on 14/12/2016. Paytm on that day announced 12/12 Cashfree Festival where customers who pay via Paytm’s digital wallet for offline shopping, get cash backs among other offers as a reward. FreeCharge on the other hand announced a two-day cash back offer where customers can avail flat 100 percent cash back for two transactions per day!
Bipin Preet Singh is right! The Indian Government must take steps to protect the interests of Indian companies. Otherwise there will be a complete domination by international firms and Indian businesses will be out of business! The Government of India must introduce and enforce stricter laws which put a limit on the amount of discounts and cash backs a company is allowed to offer. This will ensure that Indian companies are given a level playing field to compete against international giants in the business. It will also ensure that international giants cannot use their vast cash reserves completely to tilt the business in their favour. By putting limits on the amount of discounts and cash backs a company can offer, the Government of India can protect the interests of Indian companies while not discouraging foreign investments at the same time. Read more on Startup News