Google and Walmart Inc. are quickly becoming preferred customers of India's fintech pioneer Paytm as it grapples with central bank restrictions and the potential closure of a key payments subsidiary.
Payments through Paytm on India’s national payment platform fell 14% to 1.65 trillion rupees ($19.9 billion) since January, according to the National Payments Council of India. Walmart-owned PhonePe and Google’s GPay process significantly more payments than third-place Paytm, and both saw growth in the value of their payments.
Read more: Paytm: 20% drop in share value
Paytm’s decline suggests that consumers are shifting their usage to alternative services even before any disruption to its systems. The new restrictions affecting Paytm come into effect from March 15, and the company expects its digital payment services to continue operating after implemented . However, the company’s stock has fallen since the regulation was announced in late January, amid concerns that the restrictions will limit the fintech pioneer’s prospects.
The value of transactions processed by PhonePe grew by nearly 7%, while GPay saw a growth of nearly 6%, according to NPCI data. Also, when measured by payment volume, Paytm declined while PhonePe and GPay advanced.
Companies don't make money through transactions on the state-backed system, known as the "unified payments interface," but they gain access to a huge base of millions of consumers, to whom they can offer services such as insurance and mutual funds.
On January 31, the Reserve Bank of India ordered Paytm Payments Bank — which operates independently but handles a significant portion of its payments and financial services — to shut down some of its operations. Although Paytm quickly struck new banking partnerships to keep it afloat , the regulator’s decision sent its stock plummeting and dented customer confidence. Paytm shares have fallen nearly 50% since late January.
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In his first public comments after the RBI's action, Paytm's billionaire founder Vijay Shekhar Sharma this week expressed confidence that company would overcome regulatory setbacks and come back as a stronger company.
Both Paytm Payments Bank and Paytm, which trades as One97 Communications Ltd., are part of Sharma's fintech empire, but the bank is not listed. Sharma owns 51% of the bank, with One97 holding the rest.
PhonePe and GPay often outpace Paytm in UPI, both in value and volume, even before Paytm's bank subsidiary ran into financial problems.
Source: bnnbloomberg
