Paytm’s Cross-Border Payments Problem

It looks like Alibaba-backed mobile wallet Paytm may not be very useful when it comes to cross-border payments.

According to The Hindu, Paytm said late last week via a newspaper ad that its wallet cannot be used to facilitate overseas payments due to certain regulations.

Though the startup recently announced its wallet users will be able to pay for Uber rides overseas in Indian rupees, it later clarified that this will be possible through a tie-up with Alipay.

“While the mobile technology can create lower-cost and friction-free alternatives for cross-border small-value payments, the same is subject to licensing under FEMA [Foreign Exchange Management Act, 1999],” Paytm clarified.

“Any cross-border payments services by the payments bank will be offered subject to FEMA authorizations and RBI approvals. As such, the current Paytm Wallet cannot be used for overseas payments,” the company added.

By integrating with Alipay, the current Paytm semi-closed wallet will not be directly used for cross-border transactions as the wallet can only be used in India.

The Hindu reported that a Paytm spokesperson said:

“Paytm had announced the potential tie-up with Uber and Alipay on technical integration, which could allow our users to use Paytm as a payment option for paying for Uber services overseas. While we are working on the services to go live, we would like to state that we would enable usage of the service in compliance with the current banking guidelines, which allow banks to do … cross-border payments. Our statement in today’s newspaper was a step towards ensuring transparency in the ongoing service launch.”