Paytm might not be impacted by RBI’s digital payments charges; like banks, it could be on the winning side

The RBI recently created a discussion paper on digital payment charges to ensure that they are affordable to users while also being an excellent economical choice for providers. Such initiatives have been welcomed in the past as they could act as massive enablers and accelerators for the continued transformation of India into a cashless economy. 

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This was followed by a recent analysis report by Macquaire that stirred investors, predicting RBI’s regulatory policies impacting Paytm’s businesses in the future. Everyone knows that Paytm is the top player in the digital payment market. Paytm Payment Bank counted 53.8 crore online transactions in October 2021 on the Paytm mobile app. 

“With the unprecedented rise in digital payments, it is evident that the regulations are needed to uphold the best practices and ensure sustained growth to the sector. For the cashless economy to thrive, it is also important that those using digital payments are not penalized (in terms of fees) but rewarded. With the regulations being mulled upon, the listed players like Paytm and banks would be at a comfortable place as compared to the unlisted players”, said Sudhanshu Srivastav, Director, DerivativeSaint (a boutique I-Banking firm based out of Mumbai). Many of Paytm’s businesses come under the purview of regulators in India. Paytm is not alien to banking and financial regulations. The company has a robust internal mechanism to deal with regulatory compliance and has experience liaising with regulatory bodies.

RBI’s regulatory policies on capping the charges on digital payments are less likely to affect Paytm. One97, the parent company of Paytm, had the objective to drive financial inclusion in India. Their effort brought financial products and services to the underserved and unserved population of the country. 

As per Paytm’s vision, the latest move by RBI will only power the acceptance of digital payments and financial services – a massive enabler and accelerator for the continued transformation of India into a cashless economy.

“We strive to be compliant with regulators in India, such as RBI, SEBI and IRDA, who regulate our various payments and financial services businesses. We prioritise transparency and high consumer satisfaction, together with data protection, security and data privacy mechanisms, and maintain strict KYC and anti-money laundering protocols. By doing so, we can protect all of our ecosystem participants and stakeholders”, the company had said in its RHP.

Meanwhile, the digital payments and financial services platform saw its revenue from operations grow by 64% every year to ₹10.9 billion in Q2 FY 2022, driven by 52% growth in non-UPI payment volumes (GMV) and more than three times growth in financial services and other revenue. The company’s contribution profit grew to ₹2.6 billion in Q2 FY 2022, a year-on-year increase of 592%

Paytm has built a robust internal mechanism to deal with regulatory compliances in this landscape and has experience in liaising with regulatory bodies.

In conclusion, most of Paytm’s businesses are already compliant with the land laws. Paytm’s businesses will not see any disruption from regulations as it has built those businesses keeping in mind the regulatory requirements of India.