Paytm Payments Bank Shifts Bill Payment Operations to Euronet India

Paytm Payments Bank (PPBL) is undergoing a significant shift in its operations. After recently migrating its retail point-of-sale business to RBL Bank and merchant payment settlement services to Axis Bank, PPBL has now outsourced its bill payment operations to Euronet Services India.

Euronet Takes the Reins on Bill Payments

Euronet, a US-based payment technology specialist, manages backend settlement systems for various digital payment channels in India. This move comes after PPBL was reportedly restricted from offering certain services. Euronet will now handle bill payments previously facilitated by PPBL.

The Backbone of Bill Payments in India

It's important to note that Bharat BillPay, a subsidiary of the National Payments Corporation of India (NPCI), acts as the core infrastructure for most bill payments in India. Data from Bharat BillPay reveals a significant rise in Euronet's processed consumer-oriented bill payments, jumping from 4.6 million in January to 19 million in March. This surge is likely attributed to the new partnership with Paytm.

Impact on Paytm's Revenue Stream

As a settlement platform, banks typically earn a commission for each bill payment processed through Bharat BillPay. However, with Euronet handling the transactions, Paytm's revenue stream will likely shrink. Sources suggest Paytm will only receive a smaller commission as the entity initiating the bill payment transaction.

Regulatory Actions and Paytm's Mobile Wallet Business

Recent regulatory actions against Paytm Payments Bank have also impacted its mobile wallet business operations. Data from the Reserve Bank of India (RBI) shows a sharp decline in PPBL's fund transfer transactions within its prepaid payment instruments division.

In March, PPBL recorded just 7.4 million transactions, a significant drop from 20.7 million in December 2023 (a decrease of 64%). Similarly, transactions using the wallet for purchasing goods and services also witnessed a decline, dropping from 247 million to a little over 66 million during the same period.

The Genesis of the Crisis

Paytm's financial technology business encountered a crisis when the RBI restricted PPBL from offering crucial services. This included a ban on deposits, credit transactions, and account top-ups for its customers. Additionally, PPBL was prohibited from providing services like UPI and fund transfers.

Paytm's Response

To address regulatory concerns and rebuild trust, Paytm has undertaken various measures. These include revamping the payment bank's board and forging partnerships with other banks (PSP Banks) to ensure continued service offerings. Additionally, Paytm Payments Bank's nodal account has been relocated to these partner institutions.

Restoration Measures by Paytm:

To address regulatory concerns and rebuild confidence, Paytm has taken proactive measures, including restructuring its payment bank's board and establishing partnerships with PSP banks to sustain its services. Additionally, the relocation of PPBL's nodal account to these institutions aims to reinforce regulatory compliance and operational stability.

Conclusion

Paytm Payments Bank (PPBL) is navigating a challenging period. The recent outsourcing of bill payment operations to Euronet Services India reflects ongoing adjustments following regulatory restrictions. While the partnership with Euronet ensures continuity in bill payments, it likely reduces Paytm's revenue stream in this area.

The impact of these regulatory actions extends beyond bill payments. Data suggests a significant decline in PPBL's mobile wallet business transactions. To address these challenges and regain user confidence, Paytm has implemented various measures, including board restructuring and partnerships with other banks. The success of these efforts will determine Paytm's ability to overcome this current hurdle.