The central bank’s recent decision to create a discussion paper on digital payment charges has left a murmur in the markets, especially on its potential impact on banks and digital payment players like Paytm. However, analysts said on Monday that the recently-listed Paytm is unlikely to get impacted by these charges.
“The digital payments ecosystem has rapidly grown in the past five years and has propelled India to the top of the global rankings. The sector has witnessed high competition with the influx of new players and may lead to divergence from best practices in the quest for margins and market share. The upcoming regulations, therefore, will keep the consumers’ interest at the epicenter and ensure a structured and responsible growth of the sector, going forward”, said Rahul Sharma, Equity 99 Advisors.
Additionally, Paytm’s several businesses from banking, wealth management to insurance are already businesses that are required to be compliant with regulators. The company’s focus on transparency defines its products and also helps to build trust with regulators and other stakeholders.
This responsibility is even greater because the company helps people manage, spend and save their hard-earned money.
The RBI’s move to create a discussion paper on digital payment charges is to ensure that they are affordable to users, while also being a good economic choice for providers. Such initiatives could be a massive enabler and accelerator for the continued transformation of India to a cashless economy.
“For Paytm, being the only listed player that also has a banking license leads to additional regulations, which is not experienced by its unlisted counterparts. The stringent regulations in the sector will lead to somewhat a level playing field and result in consolidation of the sector; which, in turn, can be beneficial to Paytm”, said Avinash Gorakshakar, Head Research, Profitmart Securities.
Paytm, which got listed in November 2021, has been growing its businesses, with a focus on financial services. The company’s revenue has been growing on a quarter-on-quarter basis, with a push from non-UPI GMV (gross merchandise value).