The economic disruptions owing to the current pandemic, have impacted funding globally, with venture-backed investments in India falling drastically between March and June, 2020, as compared to the same period last year. Although, given the increased adoption of digital financial services during this period of social distancing, the fintech space in India has been relatively more stable, compared to other sectors such as e-commerce and consumer brands.1

The Indian Government, as well as private fintech players, continue to work together to improve access for the rural businesses to digital platforms, including the Aadhaar Enabled Payment System (AePS) network, mATMs, mobile vans with mini ATMs and bill payment kiosks, handheld PoS machine, amongst others.2 This proliferation of data network and internet access to rural areas in India is particularly assisting in accelerating the adoption of digital payments by businesses in these areas, which otherwise rely heavily on physical banking services and cash-based transactions

This newsletter highlights the key developments in the Indian fintech space from May 1, 2020 to July 31, 2020.


The transaction volumes through the Unified Payment Interface ("UPI"), cards, and mobile wallets, which had steeply dipped in April 2020, have now been revived. This is primarily on account of increased consumers using digital contactless methods for paying utility, and other bills, re-opening of e-commerce services post the pan-India lockdown, and a sudden surge in payments to over-the-top and edtech platforms. UPI itself processed approximately 1.23 billion transactions worth INR 2.41 lakh crore until June 28, 2020, which is recorded to be the most value by the channel in any given month, as per the Reserve Bank of India ("RBI").3

While traditional lenders have become risk-averse during the current pandemic, Paytm continues to expand its lending services vertical with the recent launch of a new micro-credit service, 'Paytm Postpaid,' for users transacting online for bills and daily purchases and aims to leverage its users' data to ascertain those with good credit behavior. To enable this service, Paytm has partnered with Clix Capital and Arthimpact Digital loans, along with several neighborhood stores and retail outlets.4

Separately, Paytm has also launched an INR 100 crore loyalty scheme to encourage merchant partners such as grocery stores to continue accepting digital payments through Paytm's QR code. This scheme attempts to cover merchant discount rate charges that merchants incur while transferring money from Paytm's wallet to a bank account through a reward-based points system.5

Google announced that it would invest approximately USD 10 billion into India over the next 7 (seven) years through the "India Digitization Fund." This funding is aimed at: (a) enabling affordable access and information for Indians in various local languages such as Hindi, Tamil, Punjabi, and others; (b) building new products and services which are relevant to India's unique needs; (c) empowering businesses in digital transformation; and (d) leveraging technology and artificial intelligence for social good, in areas such as health, education, agriculture and others.6 Google is also reportedly working with its partner financial institutions to launch a credit feature for small and medium enterprises on its payment platform, Google Pay.7 launched an artificial intelligence-based peer-to-peer lending platform, 5paisa Loans, which is designed to enable lending options ranging from INR 500 to INR 50 lakhs to multiple borrowers, and with a potential to earn up to 36% (thirty six percent) annual interest. The company proposes to alleviate short-term cashflow requirements of different borrowers while providing an opportunity for lenders to monetize their idle money.8

Zaggle, a fintech startup focused on assisting businesses and corporates through innovative technology solutions, has partnered with Visa to jointly develop payment solutions for small and medium enterprises that improve productivity, optimize costs and give access to faster credit.9




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Originally published 14 August, 2020

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