Before the demonetisation drive upended everything, cash ruled the day, particularly when it came to the purchase of regular goods and services. However, digital payments using UPI and e-wallets proliferated after it. Now, though, things have been disturbed once more by the Reserve Bank of India’s crackdown on Paytm.
The central bank ordered Paytm to stop accepting deposits, credit transactions, or top-ups in any customer accounts, prepaid devices, wallets, FASTags, or National Common Mobility Cards (NCMC) after February 29 due to persistent non-compliance. Moreover, UPI via the app won’t work after that date. However, it permitted crediting of interest, cashback, or refunds at any time. The RBI has already taken action against Paytm once before. On March 11, 2022, the central bank ordered Paytm Payments Bank Ltd. to immediately cease accepting new clients and requested a thorough examination of its IT infrastructure.
What is Paytm’s market share in the mobile wallet industry?
In India, Paytm is a major player in the digital wallet market. By December 2023, there were 143 crore PPI wallets in India; of those, 63 crore, or 44%, are run by the Paytm Payments Bank. PhonePe is in second place with 19 crore wallets, or 13 per cent of the market. According to RBI data, Mobikwik, Ola Financial Services, and Airtel Payments Bank are the next companies on the list.
Even when it comes to transactions, Paytm emerges victorious. Paytm is the source of 78% of all monies transferred via wallets and 57% of all products and services bought with wallets come from Paytm.
The degree of digitization of payments throughout India is reflected in the RBI’s composite Digital Payments Index (DPI). Payment enablers, supply-side and demand-side infrastructure factors, payment performance, and consumer centricity are the five broad parameters that make up the RBI-DPI. The Digital Payments Index soared from a base value of 100 in March 2018 to 418.77 by September 2023, according to a statement released by the central bank on January 31. There are just two releases of the RBI-DPI annually.
In 2022–2023 retail payments totaling Rs 659.1 lakh crore were made. Of that amount, credit transfers—including IMPS, NEFT, and UPI—accounted for Rs 550.1 lakh crore, paper-based instruments like checks accounted for Rs 71.7 lakh crore, credit or debit card payments for Rs 21.5 lakh crore, debit transfers or direct debits for Rs 12.9 lakh crore, and prepaid payment methods like cards and wallets for Rs 2.9 lakh crore.
The RBI’s action against Paytm, meanwhile, sparked rumors on the streets that Jio Financial Services might acquire Paytm’s wallet. The latter made it clear that there have been no talks in this regard and that the news is speculative.