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Paytm founder Vijay Shekhar Sharma (Photo by Yuji Kuronuma)

Paytm founder helps Indians go cashless

Vijay Shekhar Sharma shakes up the country's digital financial future

MUMBAI -- On the night of Nov. 8, trillions of rupees in high-value currency notes were suddenly "demonetized," or declared to be worthless paper, by the Indian government. But one man continued to display his characteristic grin.

Vijay Shekhar Sharma, the man who created Paytm, one of India's most successful financial technology startups, had struggled to convince investors to put money into his "mobile wallet" venture. This was a moment that would accelerate his company's growth at a pace he could never have imagined.

In the next two days, as panic-stricken Indians queued outside banks to exchange their high value notes, newspaper front pages featured advertisements proclaiming, below a photo of Prime Minister Narendra Modi, "ATM nahin, Paytm karo." Literally translated this means: "Not ATM, but do Paytm." 

Sharma was in China around that time, meeting Jack Ma Yun, the founder of Alibaba Group Holding, the online commerce giant which is an investor in Noida-based Paytm. With the excitement of a teenager, Sharma recalls Ma's encouragement: "This is the time to go aggressive; sign up everybody, don't stop."

Paytm, owned by Sharma's One97 Communications, was available within a matter of days in India's neighborhood kirana grocery stores, the smallest of vegetable vendors, and at highway toll gates. All of them had Paytm's QR barcode sticker for accepting payments displayed on their walls.

"With demonetization, the air was suddenly sucked out of the system," the 38-year-old engineering graduate from a small town in Aligarh, northern India, told the Nikkei Asia Review. While the government saw withdrawal of the high-value notes as a move against the black market and corruption, Paytm saw it as a spur to digitization. 

Little over a month later the company was processing 6.5 million transactions a day, nearly three times its earlier total. It was also adding 60,000 to 70,000 merchants a day to its platform.

The company's agility appears to be ensuring a smoother transition to a less cash-reliant, more online future for Asia's third-largest economy. Even as Sharma spoke to the NAR, in a meeting room at One97's headquarters in Noida, near New Delhi, applicants for volunteer positions queued at Paytm's nearby office.

Besides upgrading its technology platform, Paytm was seeking to sign up around 100,000 volunteers by Dec. 31 to train people to educate merchants and consumers on how to use the service. The aim is to reach every village and district in the country. The company will soon increase its workforce by 20,000 from the current 11,000,Sharma said. 

Paytm, abbreviated from Pay-through-mobile, has since become synonymous with digital payments. Even a recently introduced unified payments interface, an app that ensures seamless transfer of funds between banks and in online transactions, has not been able to gain the same popularity.

"The goal is to bring 500 million Indians on the Paytm platform by 2020," Sharma said. "We see that happening now at accelerated pace and ... if it continues for a year we will add another 150 million to 160 million customers, and some more, and then we are sorted." 

According to Reserve Bank of India data for August, banks had issued a total of 712.46 million debit cards and 26.37 million credit cards to customers. But only 1.46 million point-of-sale terminals can handle swipe cards in India. Although the number is increasing, it will be a long time before India catches up with the U.S. and Western European countries, where such terminals are ubiquitous. The gap is a huge opportunity for Paytm.

Small town struggle

Sharma has never shied away from challenges. His journey took him from Aligarh where he struggled to survive in a smart, English-speaking college, to becoming one of the most sought-after startup entrepreneurs in the country.

Initially a star student, Sharma passed his higher secondary exams at the age of 14, compared with the more usual age of 17. But he found it difficult to keep up with his class in the Delhi College of Engineering. The classes were taught in English, which he neither spoke nor understood.

"My classroom was not very comforting for a teenage kid," he remembers. "First of all, it was a very premier institute," featuring top-scoring pupils from other schools. "Secondly, I was in the classroom, where I did not know what [language the] teacher was speaking."

Undeterred, Sharma spent most of his time at the college's computer center, and by the time he graduated, had built his own content management company, Sharma had hoped he would make enough money from the business to go to Stanford University in the U.S., but in the end he sold his first business only to start another.

"Those were the days of Yahoo, and SoftBank Group was coming up. I immediately had this desire to go to Stanford University because that's what the rock stars of Silicon Valley were doing. I so much wanted to be part of Silicon Valley that I started calling my hostel Silicon Valley," he said.

He started One97 Communications in 2001 as a people-search site, and moved on to provide phone-based content such as news, jokes and astrology to telecommunications operators. He raised his first round of funding from the venture capital group SAIF Partners in 2007.

A mobile payments system, though, was a tough idea to sell to his investors, with whom he had many meetings and brainstorming sessions.

"They said, 'Look Vijay, you have to remember three things -- you are a great technology person, but you have never done a consumer [service].' I took it to heart," he said with a chuckle. "Second, India doesn't have a large customer base. Third, they did not want me to try payments. They said, 'It's okay, but payments is a bit far-fetched in a country that is far more comfortable with cash.'"

After much negotiation, his investors offered $1 million, for six months, to prove that his idea could work.

Paytm began with consumer services such as mobile account top-ups, and moved on to utility bill payments. The mobile wallet was officially launched in 2014, and the following year Alibaba invested $680 million for an estimated 20% stake.

Sharma still has big ambitions, including targeting financial services in 2017. Payments Bank, in which Sharma has personally invested 1.12 billion rupees ($ 16.51 million), will be launched, with its first branch in One97's office in Noida.

Sharma says his ambition is to give the world a new banking presence driven by transactions, in which deposits are not turned into risky assets. He wants to be remembered as "the man who changed the status quo of the country," bringing about a change that waited "generations to happen."

2017 promises to usher in more big changes. In addition to the disruptive politics of U.S. President-elect Donald Trump and firebrand Philippine leader Rodrigo Duterte, businesspeople, innovators, educators and artists are ditching the status quo and influencing the trajectory of not only Asia but the broader world. Here are the ones we think you should meet.

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