UPI usage soars, but Paytm share sinks
Company cedes market share to Google Pay, PhonePe which registered around 300 million transactions each in July while Paytm clocked 140 million transactions.
Overall UPI transactions, however, showed a jump last month, emerging as a preferred mode for small-value retail digital payments.
Paytm clocked less than 140 million transactions on UPI, the people said, a big drop from its leadership position just a few months ago. Google Pay and PhonePe registered around 300 million transactions each last month.
Paytm had around 16% share of the total UPI transactions of 822 million in July, while Google and PhonePe each had more than 35% share.
ET reported on June 4 that Paytm had done around 200 million transactions in May.
The National Payments Corporation of India, which manages the UPI railroad, does not share transaction numbers on individual companies.
Paytm may have recorded fewer transactions on UPI, but it offers multiple transaction modes to consumers across mobile wallets and directly between its bank accounts, since it is a licensed payments bank. “We achieved over 600 million transactions in July, which includes payments through Paytm Wallet, Paytm UPI, cards and net banking. We are witnessing that the Paytm wallet is more preferred for offline payments than UPI,” said Deepak Abbot, senior vice-president at Paytm. “Paytm is accepted at over 13 million offline stores and our team is aiming to onboard another 12 million merchants by the end of this fiscal year.”
The four top banks — ICICI Bank, Axis Bank, HDFC Bank and State Bank of India — which partner Google Pay, along with Yes Bank, the settlement partner for PhonePe, and Paytm account for almost 790 million UPI transactions, said the people cited above. Around 143 banks are live on the payments network.
“UPI is riding the rapid adoption of third-party applications among consumers, thereby causing the bulk of the transactions to be concentrated between the top few banks of the country,” said a senior executive with a private sector bank on the condition of anonymity.
A PhonePe spokesperson confirmed that it had done nearly 300 million UPI transactions in July and the growth had come mainly from its offline merchant base, which has grown to 5 million currently. “The rapid growth of UPI is testimony to the vast numbers of new users coming into the fold of digital payments, driven by its ease and simplicity. We’ve observed that there is a clear shift in users' preference among different forms of payment and UPI now comprises a large chunk of all online payments,” said Sajith Sivanandan, managing director, Google Pay and Next Billion Users Initiative, Google India.
Google, which did not comment on the exact numbers it clocked, said it is expanding its merchant network across offline and online, offering consumers rental payments, electricity bills and payments at grocery stores through the app.
The adoption of UPI as a preferred payment option is evident from the fact mobile wallets have almost stagnated in terms of usage over the last few months.
The wallet industry has faced stress due to regulatory pressure and a mandate to convert all wallets into full KYC instruments. As per RBI data which is available only till May, the total number of wallet transactions per month hovered between 350 million and 380 million in the first half of this year. While transaction numbers have been used as a yardstick to measure adoption of digital payments, bankers say the real value lies in merchant transactions and UPI needs to be better adopted in that space.
Paytm’s Abbot said it has around 70% market share in overall digital payments across online and offline merchants. “What needs to be seen is how merchant payments on UPI pick up during the festive season in the second half; that will be a clear indicator of adoption, a large share of these transactions across platforms are still incentivised,” the banker said.