Paytm’s Troubles Drive Indian Customers to Walmart and Google

Paytm’s regulatory troubles appear to have pushed Indian consumers to Walmart and Google-owned payments operations.

Data released Wednesday (March 5) by the National Payments Council of India (NPCI) showed that the value of Paytm payments made using the country’s Unified Payments Interface (UPI) system fell 14% between January and February.

Meanwhile, PhonePe, owned by Walmart and Google’s GPay, saw a respective 7% and 6% increase in their transaction value.

The findings were noted in a report by Bloomberg News, which notes that while companies don’t make money using UPI, it does give them access to hundreds of millions of users they can turn into potential customers.

The report also argues that the decline in Paytm’s numbers suggests consumers are finding alternative services even before the company faces any disruptions to its operations.

Those disruptions are the result of an order in January by India’s banking regulator suspending business at Paytm Payments Bank — which processes much of Paytm’s payments — after an audit found “persistent noncompliances and continued material supervisory concerns.”

The move by the Reserve Bank of India (RBI) came after two years of warnings about the questionable relationship between Paytm and its banking business.

Later reports said the RBI made its decision after the audit showed money and data traffic flow between Paytm Payments Bank and the larger company that sparked accounting and supervisory problems.

The RBI has since asked NPCI to consider a request by Paytm parent One97 Communications to become a third-party application provider for UPI, which would let it continue operating its app in spite of the regulator’s restrictions.

“As the Paytm Payments Bank cannot accept further credits into its customer accounts and wallets after March 15, 2024, certain additional steps have become necessary to ensure seamless digital payments by UPI customers using ‘@paytm’ handle operated by the Paytm Payments Bank, and minimize concentration risk in the UPI system by having multiple payment app providers,” RBI said in a news release late last month.

Meanwhile, Paytm announced last week that it was severing some of its ties to Paytm Payments Bank, writing in a regulatory filing that its board has “approved the discontinuation of various inter-company agreements with its associate entity, Paytm Payments Bank Limited.”