Paytm Faces Major Crisis as RBI Restricts Banking Services
Paytm, India’s leading digital payments platform, is facing a major crisis following a recent order by the Reserve Bank of India (RBI) to restrict Paytm Payments Bank from offering key banking services. Starting from February 29, Paytm will no longer be able to take deposits, offer FASTag, and facilitate credit transactions.
The restrictions imposed by the RBI have prompted Paytm users to search for alternative options, resulting in a surge of app downloads for rival platforms. According to data shared by app intelligence firm Appfigures, PhonePe recorded a 45 percent increase in Android downloads, with 2.79 lakh downloads on February 3 compared to 1.92 lakh on January 27.
Similarly, the Bharat Interface for Money (BHIM) app, developed by the National Payments Corporation of India (NPCI), saw a 21.5 percent increase in Android downloads, with 1.35 lakh downloads on February 3 compared to 1.11 lakh on January 27. Google Pay also experienced a modest increase of 4.9 percent in Android app downloads, with 1.09 lakh downloads on February 3 compared to 1.04 lakh on January 27.
In contrast, Paytm witnessed a significant decline in its Android app downloads during the same period. The app recorded 68,391 downloads on February 3, representing a 24 percent decrease compared to 90,039 downloads on January 27. Despite this setback, Paytm founder and CEO, Vijay Shekhar Sharma, has assured users that the app will continue to function as usual beyond February 29.
While Paytm grapples with its current crisis, its rivals are capitalizing on the opportunity to attract new users. The surge in app downloads for PhonePe, BHIM, and Google Pay signals a shift in consumer preference and highlights the impact of regulatory decisions on the digital payments landscape in India.
Analyst comment
Negative news. Market analysis: Paytm’s market share is likely to decline as users explore alternative options, leading to a decrease in its Android app downloads. Rival platforms like PhonePe, BHIM, and Google Pay are expected to gain new users and capitalize on Paytm’s crisis. This indicates a shift in consumer preference and highlights the impact of regulatory decisions on the digital payments market in India.
