Ant Financial made its initial investment in Paytm in February 2015.
Alibaba did not reveal the financial details.
The fresh capital will allow Paytm to enhance scale and develop its mobile commerce and payment ecosystem in India and invest in marketing, technology and talent.
Alibaba and Ant Financial aims to tap opportunities in India’s mobile e-commerce marketplace and digital finance industry.
“India is an important emerging market with strong e-commerce potential, and we look forward to partnering with Paytm to deliver innovative products and services to consumers. This investment will further expand Alibaba Group’s global footprint to India’s thriving mobile commerce market,” said Daniel Zhang, chief executive officer of Alibaba Group.
Paytm has recently crossed 100 million Paytm Wallet users who carry out over 75 million transactions every month.
“We look to bring half a billion Indians to the mainstream economy and help SMBs leverage this large m-commerce opportunity,” said Vijay Shekhar Sharma, founder and chief executive officer of Paytm.