Achi news desk-
Paytm has seen a sharp decline in UPI transactions, leading to a three-month straight decline in its share prices.
Photo credit: Freepik
According to data from the National Payments Corporation of India (NPCI), Paytm, the largest player in the Indian fintech industry, experienced a decline in Unified Payments Interface (UPI) transactions for the third consecutive month in April. UPI is a popular digital payment system in India that allows instant money transfers between bank accounts through mobile devices with the help of apps.
The decline in transactions processed by Paytm in April compared to March can be attributed to several factors such as seasonal trends, economic factors, regulatory changes, competition, technology issues and user behavior. The decline in transactions processed by Paytm in April compared to March may be influenced by a combination of these factors. The company processed 1,117.13 million transactions in April, which is a 9% decrease in volume compared to the 1,230.04 million transactions processed in March.
The decline in Paytm’s UPI transaction volume has led to a shrinking of the company’s market share within the UPI ecosystem. In April, the company held 8.4% market share among UPI apps, down from 10.8% in February and 9.13% in March. The reduction in the company’s market share within the UPI ecosystem reflects the challenges it faces and this is also due to RBI’s restriction on Paytm.
While the company has experienced a decline in market share, its position as the third largest player in the UPI ecosystem remains relatively secure due to its established presence, market dominance, limited competition from smaller players and network effects.
Analysts at Motilal Oswal predicted a significant decline in Paytm’s operating income compared to the same period last year. They forecast a year-on-year (YoY) decline of 21.5%, with revenue expected to fall to Rs 1,830 crore from Rs 2,340 crore in the same period last year.
In addition, the company’s loss is expected to widen significantly during the fourth quarter of 2024. Analysts expect the loss to increase to 470 million rupees, compared to a loss of 170 million rupees in the fourth quarter of 2023.
The fall in Paytm’s share price, which has totaled nearly 50% so far this year, is in sharp contrast to the modest 3% gain in the benchmark Nifty 50 over the same period.
Reports also suggest that apart from Aditya Birla Finance, other lenders such as Piramal Finance and Clix Capital have ended their partnerships with Paytm. This decision comes in the wake of the Reserve Bank of India (RBI) barring Paytm Payments Bank from new customer acquisitions and certain other operations. The RBI’s action against Paytm Payments Bank has apparently created uncertainty and apprehension among its co-lenders regarding the stability and regulatory compliance of Paytm’s banking operations
Posted: May 8, 2024, 8:48 PM IST
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