Paytm Expands to UAE With New Subsidiary, Eyes Global Growth

A decisive step toward international expansion was taken by Paytm Cloud Technologies Ltd, a subsidiary of Indian fintech Paytm, with the incorporation of a new wholly owned subsidiary in the United Arab Emirates. Named Paytm Arab Payments LLC, the new entity was formed with an equity infusion of AED 8 million, equal to about USD 2.1 million or INR 18.41 crore, at an exchange rate from the time of reporting.

As per official documents, this subsidiary will center on the introduction of Paytm's technology-based merchant payment apparatus and its financial services in the UAE market. The goal is to serve an increasingly digital finance-hungry region and to further Paytm's global diversification strategy. More noteworthy is that this move doesn't require any regulatory or governmental head nod, which means that Paytm seamlessly glides into the Middle Eastern financial world.

Broader Global Vision Unfolds

The international expansion of Paytm into the UAE is part of a wider global strategy, as it seeks to diversify far beyond its Indian base. In the UAE, as in Saudi Arabia and Singapore, subsidiaries will be set up that follow the legal requirements of those countries and carry out what Paytm calls "regulatory lite" operations. Paytm operates much like a bank, but isn't licensed as one by the RBI. The company's stated goal is to work under a structure in foreign markets that keeps it as close to a banking operation as possible, without crossing any lines.

The company has shown its willingness to explore many growth models as it pushes into international markets. This includes forming strategic partnerships, entering into local licensing arrangements, and making acquisitions. By founding Paytm Arab Payments LLC in Dubai, the company has taken the first concrete step along this path, putting it in a position to do business both in the Middle East and elsewhere in North Africa, while still trying to accomplish some of the same, albeit virtual, aims in the much larger opportunity that is India.

Refocusing After Regulatory Headwinds

This development also arrives just after Paytm re-established its core focus on the payments business. Last year, the company faced a work stoppage from the Reserve Bank of India (RBI) that gummed up the operation of its banking business and demanded specific corrections. Now Paytm has the authority of the RBI, and the company is back on track, but it is back on track in a way that emphasizes the very focus of the company pre-RBI work stoppage.

This path is bolstered by recent product introductions, especially the new and improved version of its soundbox payment device. This model, which has a real-time visual display, is actually the next-gen soundbox and a truly intelligent payment device. Merchants and customers now get real-time information through this device, making it not just a soundbox but a kind of pay station that talks to you.

Paytm Money got the go-ahead from SEBI earlier this year to function as a research analyst. This, too, is seen as the company working its way into wealth management, which, like insurance, is a sector in which tech companies have so far been largely unsuccessful. But service-based wealth management, which doesn't require investment in technology to the degree that robo-advisors do, might provide Paytm with a smooth entry into a sector that already generates stable, fee-based revenues.