The current pandemic has not only down-graded the economy but has also brought up some major changes in the lifestyle of the people. Some of the aspects which were neglected has now become a necessity. Pay on delivery is not available due to social distancing, on different online shopping sites like Amazon, Flipkart, among others, is one of the major aspects that has changed and needs to be accepted. Yes, we have to accept that with the time, cash will not have the same value as it has now and we all have to become cashless. 

The Indian Government has always tried with its policy to make India digital but this time Covid-19 has acted as a catalyst helping the Government to solve this problem. Many E-commerce payments companies came up and merited from the schemes provided by the Government to make the economy Digital. These companies not only ensured digital payment but also comforted customers by facilities like instant payments, the safe and easy transmission of money.

About Paytm:

PAYTM

One of the most successful companies in this sector is Paytm. Vijay Shekhar Sharma’s Paytm, owned by One97 Communications Ltd, offers online use like mobile recharges, utility bill payments, travel, movies, and events bookings as well as in-store payments at grocery stores, fruits and vegetable shops, restaurants, parking, tolls, pharmacies and educational institutions with the Paytm QR code. Paytm is valued at $10 billion. Millions of Indians use Paytm today and it has become one of the most convenient ways to pay. Around 7 million merchants accept payments via this media. The figures are the testimonial to the fact that Paytm has a huge customer base and all are retainable due to their constant great service quality.

About Raheja QBE:

Another sector to which Covid-19 has helped to boom is the insurance provider. After the threat of getting mentally, physically attacked by the current pandemic, people have started investing and relying more on Insurance companies. Raheja QBE, owned by Prism Johnson (51%) and QBE Australia (49%.) offers insurance service to people on health, home, vehicles, commercial properties, workplace sectors. It did a great job in the last two financial years and has huge policyholders base with it.

An agreement of acquisition:

Paytm previous week, announced about their agreement with Raheja QBE. Paytm has acquired 100% stake of Raheja QBE for Rs 568 crore. The acquisition is subject to approval from the Insurance Regulatory and Development Authority of India (IRDAI). The agreement was done through Paytm backed QorQL Pvt Ltd, which is a technology company with majority shareholding of Paytm’s founder and the remaining by Paytm. 

Impacts:

This agreement would merit Paytm in expansion and diversifying their portfolios. This will help in democratising general insurance services in the country as millions users of Paytm will get knowledge about the insurance service which was provided by Raheja QBE. Paytm will also help in accelerating the number of current policyholders and spreading it to a large population of India with the mission to create an e-commerce driven insurance company with affordable and creative portfolios availability. 

Paytm can help in providing more digital-friendly products and services which can entice the policyholders and attract new subscribers. This will surely help in increasing the conversion rate from a fraction out of 1.3 billion people using currently. 

Usually, at the time of the acquisition, the transferee company acquires both the assets and liabilities of the transferor. But, for the insurance companies, a major part of the liability is supported by reinsurers. With reinsurers supporting them in handling all the long-term liabilities of insurance companies, policyholders who were already a part of the company are not going to face any problem in case there is downs in the management. Though the holders are not directly impacted in order to retain them it is necessary to provide them with new portfolios, offers and attractive services. They have been retailed very efficiently the later company but if there are any flaws then this acquisition can backfire Paytm.

The acquisition may also have a negative impact as the insurance company is being taken over by Paytm for whom it is a completely new line, management and coordination can be a problem. Moreover, there are many other insurance companies and if they come up with better product and platform as similar to that of Paytm then it can backfire them. Paytm can lose out customers if this service does not become a success and alike their other departments. Despite this, let’s hope that this acquisition turns out to be a success and more people can get better insurance services and secure themselves from uncertainty.

The step is considered to be one of the steps towards Paytm’s mission of bringing millions of underserved Indians into the folds of the mainstream economy. Today, there are many areas that are devoid of these facilities especially rural people who are unaware about insurance services. However, the company is having a vision of putting financial services offerings in the hands of people, regardless of their location, and also convincing them to subscribe for it by creating awareness about their networking chain. At the end, the company’s success would be a success for the economy and that is what we all wish.




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