Paytm Payments Bank

Paytm Payments Bank, a unit of One97 Communications Ltd, is planning to start UPI-based payments service for its customers, as per an official statement released by the bank on 20 June 2017. This is further to strengthen the government’s initiative to build digital payments in the country, which will help consumers and merchants to transact easily on its banking platform. Paytm Payments Bank (PPB) account holders will soon be able to do money transactions using a UPI ID (username@paytmbank). The UPI app will also help merchants across the online and offline space to accept money from PPB users through UPI.

What is UPI?

Universal Payments Interface, in short referred as UPI, is a framework managed by the government to allow apps and platforms of third-parties to build cashless payment networks for various groups. Here, multiple bank accounts are combined in a single mobile application (of any participating bank), where the customers can enjoy several banking features, seamless fund routing and merchant payments in a single platform. UPI also involves “peer-to-peer” collect request which can be paid as per convenience and requirement.

Paytm and UPI

Paytm Payments Bank stated that its customers will be able to create a unique UPI account through which they can send as well as receive money. By creating the new IDs, merchants can accept and receive payments over UPI. Considering the fact that Paytm in India has a large customer base of about 225 million people, the Paytm Bank is well-positioned to emerge as a large issuer of UPI handles.

On 23 May 2017, the Paytm Payments Bank received an investment of Rs 220 crore from its parent company thereby making it a competitor of Airtel Payments Bank Ltd and India Post Payments Bank Ltd.

Present Participants in UPI

  • Payer PSP
  • Payee PSP
  • Remitter Bank
  • Beneficiary Bank
  • NPCI
  • Bank Account holders
  • Merchants

Benefits for banks using UPI

  • Single click two-factor authentication
  • Universal app for transaction
  • Safer and secured
  • Single/ unique identifier for payments
  • Enable seamless merchant transactions

Benefits for end customers using UPI

  • 24 hours service
  • Accessing different bank accounts using a single app
  • Use of virtual ID which is more secure
  • Single click authentication

Benefits for merchants using UPI

  • Seamless fund collection from customers
  • No risk involved in storing customer’s address like in credit cards
  • Identify customers not having credit/debit cards
  • Effective for e-Com & m-Com transaction
  • Solves the COD collection problem

Growing popularity of UPI

In March 2017, the total transaction was 359$ while in the previous year 2016, in November, the total transaction was merely 15$ million. This shows the growing popularity of UPI in the last 2 years. With demonetization, its popularity has further enhanced as per a data from the Reserve Bank of India. In December, the government launched Bharat Interface for Money or BHIM app. This has been downloaded over 20 million times and almost 40% accounts are of all UPI transactions. Another UPI-based app Aadhar Pay was also launched in April by the government targeted at merchants. Another popular UPI app after BHIM is Flipkart-owned PhonePe, which crossed 10 million users in January.