On 8th November 2016, Narendra Modi, the Prime Minister of India announced Rs 500 and Rs 1000 notes to be illegal tender for transactions from the following midnight. As most businesses in the cash-dominated country flinched – Paytm got to work.
The PM’s decision to demonetise 86% of the currency in circulation came as a shock to most businesses since the prime medium of transaction in India is cash. But, for an app that lets people make cashless transactions using an e-wallet, it wasn’t such bad news after all.
Vijay Shekhar Sharma, the founder and CEO of Paytm, India’s largest mobile payments startup, was attending an industry event in Mumbai when prime minister Narendra Modi announced the move to demonetise Rs 500 and Rs 1,000 notes. As soon as Sharma’s session was over, his phone began ringing non-stop: almost every newsroom in the country wanted to know what the 38-year-old entrepreneur thought of the decision, which would make 86% of India’s cash in circulation defunct.
After all, Sharma’s six-year-old startup was likely to be one of the biggest beneficiaries of the new policy, with cash-strapped Indians having to turn to other forms of payments until the currency drought was resolved. Given Paytm’s wide reach across 850,000 stores, petrol pumps, and more than 1,200 Indian cities, it was positioned as one of the best alternatives.
After demonetisation, transactions on Paytm went up to as high as 5 million on a daily basis. The transaction total hit $3.5 billion a day and the company registered a 700 percent increase in overall traffic and a 1000 percent growth to Paytm wallets.
Prior to December 2016, Paytm was struggling to establish itself as an alternative mode of transactions while vying to rival Indian unicorns such as Flipkart (now acquired by Walmart) and Snapdeal in the e-commerce space with its very own Paytm Mall.
As soon the demonetisation was announced, VS Sharma headed to the Paytm offices and the next morning saw full-page ads for his company across the front pages of most national dailies in the country. The company asked its employees to double down on the work and provide seamless and smooth transactions to its 100 million new users, which ranged from small businessmen to street vendors selling vegetables and ‘Chai’.
PM Narendra Modi hailed the move to demonetise the country’s two biggest currency notes as a move to drive India towards becoming a cashless economy. Paytm recognised the opportunity and ran with it. VS Sharma said in an interview with Scroll that the company’s employees did 600 days worth of work in 60 days – hailing it as an extraordinary achievement.
Sharma’s motto (evident in his practice and the office’s decor) is ‘go big or go home’. The swift move to ramp up the company’s operations and quickly adapt to the changing financial situation in India did come with its woes.
Paytm’s CEO VS Sharma was faced with allegations of political collusion, insensitive advertising and a number of technical issues within the iOS version of the app. The torrent of problems did not seem to slow the company down and as the cash crunch in the country got worse, Paytm worked round the clock to ensure faster and more secure transactions for the smallest of amounts.
Paytm is now valued at over $5 Billion and is rolling out a series of new services in the finance sector including wealth and asset management, insurance and B2B lendings.