Paytm’s UPI Dominance declines amidst RBI Crackdown
Paytm’s hold on the UPI main market in India is waning with the company logging a fourth consecutive decrease following regulatory headwinds. As of information available from the National Payments Corporation of India the share of overall UPI transactions held by Paytm has decreased to 8.1% in May, down from 13% in January.
The pain started with the Reserve Bank of India in January directing Paytm Payments Bank Ltd., an associated entity of the firm to stop banking operations, leading to a 55% drop in Paytm shares. Though Paytm doesn’t control the bank directly, largely founder and CEO Vijay Shekhar Sharma, this was significant for Paytm’s fintech empire.
UPI, which is overseen by NPCI facilitates instant money transfers between banks, largely handled by Asia’s fintech apps like Paytm, PhonePe, and Google Pay. As of May 2021, UPI managed a record of 14.04 billion transactions, with PhonePe accounting for close to 49% of the market and Google Pay the next closest at 37%.
In an effort to adjust in response to RBI’s directive, Sharma has made moves to diversify Paytm’s money transfer operations that were being handled by its banking unit to now be managed by partnerships with major Indian lenders like Axis Bank, HDFC Bank and State Bank of India. Sharma expressed in the latest earnings filing that near-term financial impact on operating revenue and profitability are likely due to the business disruptions.
