After Paytm Payments Bank operations ban, Paytm's UPI market share drops to 9%: Report

Payments major Paytm's market share has dropped to 9% in March from 11% in February, the recent data available on the National Payments Corporation of India (NPCI) website stated. The Noida-based fintech major processed around 1.2 billion UPI transactions in March, down from 1.3 billion transactions in February, and 1.4 billion in January. This is a major decline in its market share after the Reserve Bank of India imposed ban on its banking arm Paytm Payments Bank Limited (PPBL) over compliance issues.

In comparison, competitors and market leader PhonePe and Google Pay saw their volume count go up. In March, Google Pay processed 5 billion transactions, up 6.3% from 4.7 billion in February and 4.4 billion in January, while PhonePe processed 6.5 billion transactions in March, up 5.2% from 6 billion in February and 5.7 billion the month before.

In February, Paytm’s UPI payments business registered a 7.6% fall in transactions over January. Its share of UPI payments in February reduced to less than 11%, from around 11.8% in January. The fintech has seen its share declining, with its share in the market being 12.8% in August last year.

During the years of 2020 and 2021, Paytm held an approximate market share of 11-12 per cent in terms of transaction volume. This figure rose to its highest 13 per cent, but then declined to 9 per cent. It is noteworthy that during the prior period encompassing 2018 to 2019, Paytm commanded an impressive near-40 per cent stake in the UPI marketplace.

After RBI's restrictions on Paytm Payments Bank from March 15, Paytm has been functioning as a third-party application provider (TPAP) just like its competitors PhonePe and Google Pay. 

The Noida-based fintech company has roped in Axis Bank, Yes Bank, SBI and HDFC Bank as its payment service provider (PSP) banks to be its associates in the TPAP service. 

Banks associated with Payment Service Providers (PSP) facilitate the interconnection of UPI applications within the banking network. For instance, Paytm up until used Paytm Payments Bank Limited (PPBL) for its network.