Less than four years after PayPal set up camp in India to infiltrate the world’s second-largest market of internet users, the payments giant has decided to tap out. While the company issued a long statement that inferred that its priorities had changed in the region, it did not elaborate as to why it would no longer continue its local operations. As far as what’s clear, PayPal will soon alert merchant partners in India that all contracts will be terminated on April 1, according to an anonymous spokesperson.
The company did share that it will instead scale up its existing cross-border business for small enterprises, to increase its sizeable position in the country’s fast growing export market. The spokesperson further said, “In the early days of the pandemic when the government’s measures to curb the virus were gaining momentum, we started planning on how we can protect our business and optimize our growth.” They added “India is a very crucial market for PayPal, and after thorough analysis, we decided that we are best placed here to focus on enabling cross-border trades and exports for Indian businesses aiming to go global.”
Until this point, PayPal’s Indian operations focused on two key initiatives: enabling payments for domestic brands and facilitating cross-border remittance services for exporters and small businesses. The move came as a surprise given PayPal’s activities in 2020, suggesting growth rather than winding down. In recent years, PayPal partnered with popular Indian businesses to facilitate growth, spoke about building a payments service powered by India’s UPI railroad, and processed $1.4 billion worth of international sales for merchants in 2020 alone. It had embarked on product development that would help Indian businesses reach nearly 350 million PayPal customers worldwide as an economic bolster for the region.
While the company may not have directly addressed why they would cease domestic operations in India, it is no secret that India’s domestic payments market is one of the most competitive in the world. PayPal was contending with fellow tech giants Google, Facebook, Walmart, and Amazon for its share of retail payments on India’s fast growing Unified Payments Interface channel. Aside from that, India’s regulatory environment is notoriously difficult for foreign entrants, in order to preserve the competitiveness of its own domestic offerings. Instead, the company’s focus on R&D to provide a deeper breadth of financial services such as the creation of a dedicated business unit for crypto will be the aim.
For the most part, PayPal has reassigned its existing teams in India to focus on its remaining services in the region. Its three technology centers across Bengaluru, Chennai, and Hyderabad will instead focus on global trade and business.