PayPal has been driven by market forces to close down its payment operations in India. Instead, it will scale up its existing cross-border business for small enterprises, to gain a significant share of the country’s rapidly growing export market.
PayPal recently reported its strongest-ever quarterly growth in payment volume in Q4 at $277 billion, as the COVID-19 pandemic fuelled online transactions across the globe.
However, in India, the company says it will soon initiate a restructuring exercise and, from 6th February, will start notifying Indian merchant partners who use its gateway services about plans to terminate contracts by 1st April.
PayPal’s domestic Indian operations include its payments gateway and aggregator services for online merchants and brands. The move away is expected to streamline operations in the country’s highly competitive digital payments market.
“In the early days of the pandemic when the government’s measures to curb the virus was gaining momentum, we started planning on how we can protect our business and optimise our growth here,” a spokesperson said on condition of anonymity.
“India is a very crucial market for PayPal, and after a thorough analysis, we decided that we are best placed here to focus on enabling cross-border trades and exports for Indian businesses aiming to go global.”
PayPal’s India operations are largely divided into two buckets.
One focusses on enabling payments for domestic brands such as Myntra, Swiggy, BookMyShow through the gateway services, and the second unit that focused on cross-border remittance services for exporters and small businesses.
“It made sense to us to do one thing right, which is our cross-border trade business, rather than to focus on multiple businesses…we can’t do everything here,” the person added.
“From 1st April, we won’t be offering Payment Gateway and Aggregator services here. We are ensuring that this process is smooth for our customers and employees here.”
The company’s three tech centres — in Bengaluru, Chennai and Hyderabad — which are among the largest outside the US, along with its business development teams, will now focus entirely on the cross border trade and global business.
While the domestic payment service will have run its course by the end of the current fiscal year, the company will keep select operations live for any dispute resolution and refund related reconciliations, the person said.
In India, PayPal’s inward remittances volume for 2020 grew by 22% to $1.4 billion, led by a massive demand for EdTech, wellness, fashion and freelance services globally for Indian business.
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