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Advertisements of Paytm are seen placed at stalls of roadside vegetable vendors in Mumbai, November 19, 2016.Reuters file

Digital payments company Paytm is close to acquiring rival FreeCharge from Snapdeal, which had bought it in a cash-and-stock deal for about $400 million in April 2015. Snapdeal is going through a tough time, with reports of its imminent acquisition by Flipkart and investor SoftBank writing down its investment in the e-commerce company.

"The (FreeCharge) deal could be closer to $45 million," the Economic Times quoted a source privy to the development as saying in a report on Thursday.

Sandeep Tandon and Kunal Shah had founded FreeCharge seven years ago.

The ET said that Paytm has signed a "non-exclusive term sheet" and if it goes through, the deal is likely to be signed within a month.

Paytm was founded by Vijay Shekhar Sharma in December 2010; he is currently the CEO of the fintech company.

However, it is not a done deal, as other buyers in the race include PayPal and some Indian banks, the daily said.

FreeCharge investors comprise Sequoia Capital, ruNet, Tandon Group, Tybourne Capital Management and InnoVen Capital while Paytm counts Alibaba Group, HDFC Bank, ICICI Bank, MediaTek, Ratan Tata and Reliance Capital as its investors.

One97 Communications, which owns Paytm, has raised $760 million till now and is reportedly close to getting an infusion of about $1.2 billion from Japan's SoftBank.

FreeCharge has raised $117 million from its investors amid a digital revolution unleashed by the Modi government that picked up momentum after demonetisation of high-value currencies last November followed by incentives to embrace digital payments.

If the sale materialises, it would mark a deal ahead of rumoured acquisition of Snapdeal by bigger rival Flipkart.

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An employee is seen at the front desk of Snapdeal headquarters in Gurugram on the outskirts of New Delhi, April 3, 2017.Reuters file