What specific data set are you referring to? Sorry unable to understand so asking for clarification
Please confirm what is a super app? Which paytm service will immediately stop without PPBL? And what would be the revenue impact of it?
Super Apps are all-in-one ecosystem for various aspects of daily life. Banking/Payments being a major one.
While technically separate entities, One97 Communications and Paytm Payment Bank shared a close relationship with significant overlap in ownership, operations, and governance
One97 Communications leveraged Paytm Payment Bank for certain wallet functionalities, like wallet top-ups and KYC verification.
The disruption of certain Paytm Payments Bank services (e.g., direct wallet top-ups) could lead to decreased wallet usage, indirectly impacting other revenue streams like commissions from merchants and payments.
I can’t quantify the revenue impact at the moment because it’s more than just numbers, its reputational, given all the negative headlines.
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Thanks for explaining your position. Let’s see how much is the revenue impact both from wallet directly as well as reputational
https://www.rbi.org.in/Scripts/PSIUserView.aspx
https://rbi.org.in/scripts/NEFTView.aspx
https://www.npci.org.in/what-we-do/upi/product-statistics
https://www.npci.org.in/what-we-do/netc-fastag/netc-ecosystem-statistics
PayTM Payments Bank Ltd’s mobile banking, UPI, Fastag monthly data are available in the above dataset. Industry total data for mWallets are also available. Collating everything, you will know how much One97 is claiming, and how much is reflected in publicly available data. How you interpret the difference, is based on your perception and assessment of One97’s credibility.
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I wanted some thoughts on 3 questions (I don’t see anyone discussing them yet):
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Considering PPBL and OCL’s nodal accounts were impacted negatively, do Paytm’s merchants (both online under PA/PG regulations & offline using Soundbox) or otherwise have to do fresh re-KYC with other banks, considering the size of merchants accounts is ~40 million accounts?
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also as per notification, RBI alluded to OCL and another entity called “Paytm Payments Services Ltd” nodal accounts to be terminated, not PPBL - is PPSL same nodal as PPBL which has been directed to be terminated at the earlier, but not later than 29th feb 2024?
- Further, Paytm Payments Services Limited is also under RBI’s PA/PG applicant which has been barred from onboarding from late Nov 2022. And now since RBI has advised them to shut down PPSL’s nodal accounts, can we infer that RBI might not give them the PA/PG license which will severely impact their ability to onboarding merchants for their online payment gateway rails (unless of course, they can use 3rd party licensed PA/PG rails), thus impacting many/more line-items in P/L?
I appreciate any help you can provide.
You can go through The Ken article to educate yourself about the same.
https://the-ken.com/story/rbi-issues-a-death-sentence-to-paytm-payments-bank/?searchTerm=paytm
Please message me in case you don’t have a subscription. I can provide you with a copy of the same.
Not a surprise, but something to keep in mind.
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This should be easy one as mentioned in last concall - Nodal account is not big problem as you can open this account with other banks but the commercial and technicality (like settlement time) is talking point with these banks. Management mentioned that it is just matter of API call but of course they need to integrate with them so it could require some development.
for PPSL, PA application is stuck with MHA (even after Ant’s holding going down under 10% - not sure what is road block here hope it does not go way like PPBL).
Thanks!
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I think Paytm Payment Bank had a competetive advantage over other Payment Banks because of Paytm and not the other way. Had they been separate, PPB would also have been a faliure like other PBs.
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Dear Mr.Aggarwal,
Thank you for sharing the link but I’m afraid I could not go through the content owing to a paywall. Would you mind sending a soft copy to: jai.dlf@gmail.com
Await your kind help and thank you in anticipation of the same.
Best regards
Jai ganesh
Acknowledging that the RBI has received feedback from the wider public, Das said the RBI will be coming out with a set of FAQ (frequently asked questions) to assuage the concerns.
Partnering with Paytm Payments Bank a business decision of banks, says RBI’s Swaminathan
The following is my assessment of the situation.
- It is excessive to think that Paytm is lost without its own Payments Bank. Paytm’s most competitors do not have Payments Bank license. For example, PhonePe tied up with Yes Bank to provide UPI VPA (@ybl) and GPay with HDFC (@okhdfcbank), ICICI (@okicici), Axis (@okaxis?), etc.
- Tieing up with multiple banks helps with diversification in UPI. Next time, if a partner bank gets into trouble, Paytm wouldn’t have similar difficulties. This is a very good lesson for Paytm not to rely on any single entity for its various verticals. This realization will help the company in the long run.
- What about the challenge of migrating away from Paytm Payments Bank? These difficulties are of very much temporary in nature. The management conveyed the same. They estimate at most 3 months for the operations to be back to normal. RBI clarified that this is action against Payments Bank and NOT Paytm super app.
- Getting rid of Paytm Payments Bank helps Paytm app stay clear of long-standing threat of regulatory overhang. Paytm app is coming out of this problem now, which I see it as positive. Yes, there are bound to be bruises. But the lessons from this will strengthen the company in the long run.
- Since the beginning, there is one aspect of the company that I was counting on is the execution skills on the ground. None of us can forget their swift action during demonetization. Then came their innovation of sound boxes. More than the innovation, the success of their sound box is due to the field agents and their execution skills. I even think that paytm’s field agents to be the company’s durable strength over its competitors. Some of us believe that Payments Bank was Paytm’s edge. But in the hindsight, it is actually paytm’s main weakness. The edge remains to be the field agents and the execution skills. So in my view the edge remains intact, and the weakness is forced away.
- What about the credibility loss? I admit, this is the main setback from this fiasco. I keep in mind Nestle’s Maggi fiasco and Pepsi & Coca Cola’s fertilizer traces fiasco. These were equally, if not much more, serious that affected credibility. These companies came out of these successfully. I think it is very much possible Paytm will do the same, considering their execution skills. I suspect this setback is temporary in nature. It’s a matter of paytm’s field agents communicating with their merchants. RBI even conveyed their commitment to minimize the inconvenience to paytm customers. Once paytm makes everything work well again, there is no reason why merchants would avoid paytm. Yes, some ground will be permanently lost to the competition. But the rate at which paytm is growing, the lost-ground is not worrying me.
- What about the hesitation by the potential partners due to regulatory action? RBI clarified that tieing up with Paytm is purely business decision by the banks. I don’t think any more clarity can be expected from RBI in regard to this. Bottom line is, RBI is not discouraging potential partners. I believe the partners would sense the business opportunity here.
In short, a lot depends on the execution skills of paytm. There are reasons to believe the company would come out strongly from this difficulty. I also don’t see anything that would negatively impact paytm for the long run.
Disc: Invested. I always consider myself as a novice investor. No recommendations here. I welcome opposing views, which would help me keep my thinking unbiased.
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Next in line for RBI crackdown are GPay and Phone Pe. Paytm has the oppurtunity to capture UPI customers of GPay & Phone Pe after discontinuation of its wallet business
As far as I checked, this transaction is not part of the listed entity, One97 Communications Ltd. In fact, Paytm e-Commerce Private Limited that deals with ONDC is separate and not related to the listed entity.
Please correct me if I’m mistaken.
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In a recent clarification, the company mentioned application of Payment Aggregator license by 100% subsidiary Paytm Payment Services Ltd (PPSL). It also mentions this:
We would also like to highlight that there have been changes in the ownership structure of the
Company, with the Paytm founder (Mr. Vijay Shekhar Sharma) now being the sole Significant
Beneficial Owner.
What is the meaning of this? Is PPSL not owned by the listed entity anymore?