As Paytm races against the clock to meet the Reserve Bank of India’s (RBI) deadline, the fintech giant finds itself in a situation that is weakening by the day as it tries to retain its 37-million-strong business base amid concerns about its path. to profitability.
The company has only 14% of UPI’s market share, but its strength lies in its vast 37 million QR code network spread of merchants across the country.
Paytm’s revenue streams include merchant subscriptions, sales of sound boxes and Point of Sale (POS) devices, monthly sound box subscription charges and Merchant Rebate (MDR) fees on payment gateway services.
Paytm’s success with QR codes is facilitated by fast real-time payment settlements for merchants using Paytm Payments Bank accounts, an edge that has now disappeared. Sound boxes and POS devices, particularly favored by small and medium-sized retailers, are the main sources of revenue from subscriptions.
Paytm’s sound box has seen significant adoption and has the majority of sound boxes deployed in the country. The company had earlier forecast 4-5 crore audio boxes deployed in the next 3-5 years, with Paytm playing a key role in driving that expansion.
Mounting competition
While Paytm is actively negotiating with banks to mitigate disruptions, competitors like PhonePe and Google Pay have already partnered with several banks.
Paytm merchants now have several alternatives, including PhonePe, Google Pay, CRED Pay, Amazon Pay, TataPay, SlicePay and HDFC’s SmartHub Vyapar app. Notably, some banks and companies offer sound boxes at a significantly lower cost compared to Paytm.
State Bank of India, a key player in the banking sector, is aggressively expanding its voice box network by partnering with both domestic and international technology firms. Banks are also looking at current and savings account openings, along with deploying devices to stimulate business growth.
All eyes are on the release of FAQs by the RBI, expected this week, which will provide clarity on the transition process to minimize impact on end users.