There are not many things that can be bought for a rupee, a candy maybe. But, what if you could buy gold with that rupee? Alibaba-backed online marketplace company Paytm, in tie-up with MMTC’s Swiss venture PAMP SA, is making it possible in a first such initiative anywhere in the world.
Paytm on Thursday announced the launch of ‘Digital Gold’, a vertical to allow its 200-million plus users to buy, store and sell gold instantly. Founder and Chief Executive Officer Vijay Shekhar Sharma referred to the new offer as a wealth management product that would be a part of its proposed payments bank, which was still awaiting a final nod from the Reserve Bank of India (RBI).
“Customers can now buy and sell international quality gold at market-linked prices instantly for as low as Rs 1 using their Paytm wallets. If a user wants to sell the gold, MMTC-PAMP will buy the gold back and the money will be transferred to his bank account,” Sharma said.
While the purchased gold can be stored in MMTC-PAMP’s secure vaults free of charge, a consumer can also request for home delivery of minted coins or sell it back online instantly.
While the company did not elaborate on this, it may get into gold loans as well. It’s learnt to be already working on the plan. Estimates suggest gold worth $900 billion is stocked in homes and bank lockers in India. Paytm, which is on a rapid expansion mode, is in talks for a fresh round of funding that could materialise within the next three weeks. The company is looking to raise around $1.5 billion from Japan’s SoftBank, it is learnt. However, Sharma refused to comment on this.
The company would need around Rs 10,000 crore of investments in banking and finance for over three years, Sharma pointed out. The company has been burning a lot of money as well while on the growth path. In the fourth quarter of FY2017, the company spent over $105 million on various projects, including expansion in Canada. Payments banks can accept deposits from individuals and small businesses of up to Rs 1 lakh per account. To deepen financial inclusion in the country, the RBI had allowed small finance banks and payments banks to start services.
Sources said the company has also received interest from US-based high networth individuals for investing in the company. While Sharma did not comment on the discussions, he said there is interest from across geographies for putting in funds. Paytm has been one of the biggest beneficiaries of the government move to scrap old notes of Rs 500 and Rs 1,000. At present, Paytm operates a mobile wallet and e-commerce marketplace. With over 1.5-billion transactions on its platform, the company now aims to cross the 4.5-billion mark this year. “We have seen significant growth and this year too, we expect to see manifold growth to 4.5 billion. A significant part of this growth is coming from tier-II and beyond cities,” Sharma said.
He added that cities like Jaipur, Sonipat, Vijayawada, Visakhapatnam and Durgapur were among the fastest-growing for the company. At the end of March 2017, Paytm had 218-million mobile wallet users.
