Taiwanese semiconductor firm MediaTek has agreed to invest US$60 million in Indian e-commerce service Paytm, per press reports, giving it more leverage in a large and key market.
Paytm CEO Vijay Sharma told foreign media that MediaTek had secured the amount from its investment fund Mountain Capital.
That amount is part of US$300 million that Paytm raised in its lastest round of funding, which will give the Indian company a valuation of about $5 billion.
Previous investors in Paytm include Chinese e-commerce giant Alibaba, Taiwanese contract consumer electronics assembler Foxconn and Chinese international investment company Fosun.
Paytm is a 6-year-old digital wallet provider that lets customers pay bills through an app. Paytm has created 135 million digital wallets in use, the company said. As it grew, Paytm also began selling merchandise on its website.
MediaTek's investment in Paytm marks a strategic move for both parties, Sharma was quoted saying. MediaTek may be able to grow its India business into chipsets designed for security and other services, he said in a foreign media interview.
"We can expand our business by integrating into MediaTek's smartphones, and MediaTek can grow its business by offering security integrations to us and others," Sharma said.
In growing from an online payment service to an e-commerce platform, Paytm has doubled in value from one year ago.
With the funding from MediaTek, Paytm plans develop a new online savings and lending service called Paytm Payments Bank.
Mediatek rejected news of the US$60 million investment in an official announcement and said it was still under evaluation.
MediaTek usually keeps a low profile about its operations. It has invested previously in e-commerce companies in China.
The company’s investments outside processing chips signals an interest in more than just its hardware business.
India, with a population of more than 1.2 billion, represents a booming mobile technology market. It’s the world’s second-biggest smartphone market and sales figures are growing as China sees a decline.
However, most people in India earn low incomes and lack credit cards to process online transactions. But even without credit cards from banks, people in India can register a digital wallet account and buy things online through their smartphones.
Indians use Paytm to buy event tickets, settle utility bills and book Uber rides, hotels and flights. The company claims 75 percent of India’s digital wallets and processes around 3 million transactions per day.