At The Money Cloud we have kept a close eye on the Indian micro-payments market. It is fascinating for a number of reasons: firstly, it showcases some of the most advanced fintech being developed anywhere in the world; secondly, it is a model that it is likely to have a transformative effect on the way people pay for things, not just in India, but all over the world. Thirdly, it is a place where social media giants embrace finance, and lastly, it is an open field and nobody knows who will emerge triumphant from this fragmented and highly competitive market.

In the past, we have looked at Google payments app Tez, Paytm, WhatsApp Pay, and a range of services for sending money overseas, such as TerraPay, Instarem, Ria Money Transfer and more.

This week, an article in Bloomberg revealed that Warren Buffett had invested into Paytm, which demonstrates just how influential and lucrative the payments market in India looks set to become. According to Credit Suisse, the market will soon (by 2023) reach $1 trillion dollars, and stands at $200 billion today. But this volume accounts for just 30% of all payments, with the rest being made in cash. Compared with a market like China, where the mobile payments market is already worth $5 Trillion.

According to journalists Suritha Rai ad Anto Anthony, the major difference between the Chinese and Indian payments markets is that China is a closed shop to foreigners, whilst India’s government is welcoming international players to launch their services in the country. Hence, the world is looking on to see the future of the payments industry being incubated. India’s government is keen to move towards a cashless society, and has provided an enviable payments infrastructure to facilitate digital wallets, and domestic and international payments.

Looking at the numbers, however, it is Indian born services that are leading the way. Flipkart has generated more than 133m downloads, whilst Paytm leads the way with more than 150m. Google Tez apparently has 50m users, whilst another Indian firm, BHIM, has pulled in 32m customers.

What the Silicon Valley tech giants do have, however, is a colossal number of users who may well be tempted to switch their payments habits if the likes of Facebook, Google, and Apple can make their payments options more visible, effective, and a good cultural fit. In this regard, WhatsApp, which is phenomenally popular in India, is one to watch, but is yet to progress beyond the beta testing phase.

Google Tez has changed tack, and is now known as Google Pay, launching with a range of new services including splitting bill payments, and tap-tap-go style functionality that makes pinging rupees around as easy as messaging a friend.

And then there is Ant Financial, the Chinese fintech giant that commands huge volumes of transactions in the East, and is determined to break into markets including Africa, India, and the US, have narrowly missed out on the acquisition of MoneyGram last year.

Finally, could blockchain based payments apps make an impact on the market? Again, here, foreign players are on the charge, with Singapore based LaLa World has been making headlines, whilst online startup mag Inc42 lists no fewer than 13 new entrants, all with ambitions to be the everyday Indians preferred payments choice.

Warren Buffet et al should not expect to have things easy, but as things stand, it seems the Sage of Omaha has backed the right horse.

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