One97 solutions, Paytm’s parent company, will invest Rs.600 crore to develop a QR-based payment solution for merchants, enabling quick and secure digital payments over a small bandwidth.
The investment will be diverted towards establishing the back-end infrastructure and processes for the new QR-code based payment solution. The company also plans to ramp up its manpower to expand its reach and shorten the implementation time.
The need for a payment solution for merchants and retailers was realised after the demonetization of Rs.500 and Rs.1,000 notes, when many merchants and customers couldn’t establish profitable trade due to the lack of legal tender. E-wallets and online bank transfers worked for the few lucky enough to be covered by fast internet on medium-to-high-end phones, but the large majority of the Indian population uses basic low-end phones with intermittent internet connectivity.
The new payment solution involves issuing individual retailers with a unique QR code, which can be scanned by customers in order to make quick and secure payments. The company aims to rope in at least one million merchants every month and eventually reach at least 10 million merchants by December, 2017.
Alibaba, the company that backs Paytm, has committed Rs.1,350 crore to be invested over time in Paytm, and part of this is being used for the QR-tech.
Senior Vice President at Paytm, Kiran Vasireddy, said, “Our 0% merchant transaction fee coupled with an aggressive merchant acquisition rate, will help us take QR code-based payments to every nook and corner of this country. We will invest Rs 600 crore this calendar year, which will be used for scaling up merchant acquisition teams, marketing and cash-backs.”