PayPal Files Copyright Suit Against India’s Digital Payment Provider Paytm
In what many are calling a tactical move to stymie a competitor, PayPal has pushed forward on a copyright suit against Paytm, a leading digital payment service in India.
Back in November, US-based ewallet service PayPal lodged the complaint against homegrown digital payments service and ecommerce platform Paytm. (Indian news media first discovered and reported on PayPal’s move earlier this week.) In its complaint, PayPal argued that the color scheme of competitor Paytm was too close to its own, noting that the names of both services also started with the letters “pay.” PayPal went on to claim that Paytm’s logo was “deceptively and confusingly similar” to its own.
Paytm has emerged from a crowd of Indian digital payment services to become one of the sector’s leaders.
“Whilst filing of oppositions is fairly normal in the industry, in the present case it may also be a competitive move,” Samuel Niranjan, an intellectual property lawyer with the law firm Khaitan & Co. told the Economic Times in an interview.
Paytm has been one of the rare benefactors of demonetization, a surprise move by the government on November 8 that made two commonly used denominations of cash unrecognized as legal tender. As a result of demonetization, consumers in India, many of whom are underbanked and reliant on cash to make all types of payments, have rushed into the arms of digital payment services like Paytm and competitors MobiKwik and FreeCharge. All three services reported seeing a massive uptick in downloads and number of transactions following the demonetization announcement.
Payment companies like these often first gained traction among mobile phone users in India by providing minute- and data-recharge billing services, but have since expanded their portfolio of payment services to include other types of bills, ecommerce purchases and peer-to-peer transfers that can be transacted on smartphones.
Paytm’s main advantage over both domestic competitors and Western companies like Paypal resides in its close relationship with internet services giant Alibaba. The Chinese company, along with its financial technology affiliate Ant Financial, owns a 40% stake in One97 Communications, Paytm’s parent company.
It’s been widely reported that Paytm plans to spin off the ecommerce marketplace arm of its business to become a portal for Alibaba.
What’s more interesting is what lies in store for Paytm’s payments business under the aegis of Ant Financial, one of the global leaders in mobile financial services.
Ant Financial is well ahead of its Western competitors in mobile fintech products. In China, it already offers users of its Alipay digital payment service a digital banking offering called MYBank, as well as an interest-generating money market fund called Yu’e Bao. Both have easily found customers in China, where people have not only leapfrogged PCs for mobile devices, but have also skipped over traditional retail banking and investment vehicles in favor of mobile versions accessed by smartphones.
Ant Financial and Paytm seem to expect that a similar process will unfold in India, a market that, like China, has a large population with little to no access to services like credit cards and checking accounts. The number of internet users in India is set to grow from 429.2 million in 2016 to 571.5 million in 2020, providing a fertile market for emerging financial tech services.
Source: eMarketer
