Paytm’s stock price crashed another 10% on Monday, marking the third consecutive session of decline as doubts loom over its payments bank operations. Meanwhile, competing payments firms have set their sights on Paytm’s merchant business. Rumours of Mukesh Ambani’s Jio Financial Services potentially taking over Paytm’s operations resulted in the shares spiking to an all-time high and closing 14% higher. Paytm is reportedly in discussions with banks to migrate merchant accounts linked to QR codes, yet regulatory clarity is still sought regarding the feasibility of such a one-time account shift without fresh KYC. PhonePe and Google Pay have also intensified their efforts to attract merchants, with PhonePe offering special deals on payment acceptance devices and Google Pay increasing its outreach and acquisition strategy towards merchants.
Fintech startup Slice has recently launched its UPI first account to the wider public. The account provides users with a UPI handle and a virtual account. A fintech executive identified the current Paytm situation as an opportunity for other players to capitalize on. HDFC Bank is also looking to expand its QR code merchant base, which was previously considered unprofitable due to the lack of merchant fees. However, the competition for deposits has prompted banks to reconsider this segment that they had lost to fintech companies.
The stock price of Paytm’s parent company, One 97 Communications, hit an all-time low of Rs 439 on the BSE, marking a nearly 80% decline from its IPO price. One 97 Communications has been engaged in damage control, refuting reports of investigation into the company and its associate, Paytm Payments Bank, for violating foreign exchange rules. Paytm’s stock has plummeted over 42% in the first three trading sessions of February following the Reserve Bank of India’s decision to prohibit Paytm Payments Bank from accepting fresh deposits after February 29.
Paytm’s founder and CEO, Vijay Shekhar Sharma, has reassured customers of the app’s safety and its continued operations. However, there is still no clarity regarding the services the payments bank can offer starting from March 1. Harish Bijoor, a business and brand strategy specialist, commented on the negative impact of the Reserve Bank of India’s directive on Paytm’s brand value, stating that a brand’s reputation is deeply affected by such regulatory actions.
