Paytm loses UPI market share for third month running

According to data from the National Payments Corporation of India (NPCI), Paytm, the major 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 payments system in India that allows for instant fund transfers between bank accounts via mobile devices with the help of apps.

The decline in transactions processed by Paytm in April compared to March could be attributed to several factors like seasonal trends, economic factors, regulatory changes, competitive, technological issues and user behaviour. The decline in transactions processed by Paytm in April compared to March could be influenced by a combination of these factors. The company handled 1,117.13 million transactions in April, marking a 9 percent decrease in volume compared to the 1,230.04 million transactions processed in March.

The decrease in transaction volume of Paytm’s UPI has led to a contraction in the company’s market share within the UPI ecosystem. In April, the company held an 8.4 percent market share among UPI applications, down from 10.8 percent in February and 9.13 percent in March. The contraction 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 have projected a significant decline in Paytm’s revenue from operations compared to the same period in the previous year. They anticipate a year-on-year (YoY) decrease of 21.5 percent, with revenue expected to drop to Rs 1,830 crore from Rs 2,340 crore in the year-ago period.

Additionally, the company’s loss is forecast to widen substantially during Q4FY24. Analysts expect the loss to increase to Rs 470 crore, compared to a loss of Rs 170 crore in Q4FY23.

Fall of stock price of Paytm, amounting to nearly 50 percent so far this year, contrasts sharply with the modest 3 percent rise in the benchmark Nifty 50 index during the same period.

Reports also indicate that besides Aditya Birla Finance, other lenders like Piramal Finance and Clix Capital have terminated their partnerships with Paytm. This decision comes in the wake of the Reserve Bank of India (RBI) barring Paytm Payments Bank from conducting new customer acquisitions and certain other operations. The RBI’s action against Paytm Payments Bank likely created uncertainty and concerns among its partner lenders regarding the stability and regulatory compliance of Paytm’s banking operations