Paytm sees massive user slump after RBI restrictions

A survey database released on Feb 8 by Kirana Club mentioned that 42% of Kirana stores (general/grocery shops) shifted to other payment apps from the Paytm app after the Jan 31 notice of the Reserve Bank of India (RBI), levying restrictions on Paytm Payments Bank Ltd (PPBL).

In this survey conducted across 5,000 shop owners, 20% of them mentioned their plans to shift to another online payment app.

This survey also revealed another aspect of the retailers’ confidence in Paytm, as 68% of these stores have lost their confidence in Paytm.

As per the survey, most of the vendors opting for other payment apps have chosen to switch to PhonePe, followed by Google Pay, used by 30%, and BharatPe, used by 10%.

After RBI’s notice, Paytm’s download numbers saw a 32% slump on the app store from Feb 1 to 6. While the same has shot up for its competitors, PhonePe, Google Pay, and Mobikwik.

The highest surge was seen in downloads of PhonePe, as its numbers increased by 37.5 lakh in these five days, as compared to 26.8 lakh downloads in the previous five.

An increased demand for QR codes and smart speakers was also seen for PhonePe merchants.

The National Payment Corporation of India’s (NPCI) BHIM UPI app also saw significant growth in its download numbers.

RBI restricts Paytm payments bank operations

RBI had restricted operations of PPBL from Feb 29 for creating any new customer accounts, wallets, FASTags, or other deposits or top-ups through any other sources.

The RBI directed that PayTM could return any pending interest, cashback, or refunds at any time.

However, the RBI has stated that the Paytm app will not be impacted by the recent order issued against PPBL.

“Just to clarify, the action is against Paytm Payments Bank, not against the Paytm app. The app is not impacted by our action, delineating the scope of the RBI’s directive,” said RBI deputy governor Swaminathan J in a press briefing.

Swaminathan added that the banks’ decision to partner with Paytm Payments Bank is a business decision, indicating the banks’ autonomy in collaborating with PPBL.

The Deputy Governor emphasised that the recent actions are directed explicitly towards Paytm Payments Bank and do not impact the functionality or operations of the Paytm app.

This clarification is reassuring to millions of users who rely on Paytm for a wide range of digital payment services.

This statement opens avenues for continued and potential partnerships between PPBL and other banking institutions, ensuring a robust framework for offering innovative financial solutions to customers.

(With inputs from IANS)

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