Picking Up The Paytm Pieces

Paytm Founder Vijay Shekhar Sharma Is Back In The Trenches After Rbi's Recent Action Left Him Without A Banking Platform. There Are Still Some Opportunities, But He Will Have To Move Swiftly To Grab Them

- ANAND ADHIKARI

RBI HITS PAYTM HARD

• THE CENTRAL BANK'S ACTION IMPACTED THE PAYTM BRAND
• MAJOR BANKS AND NBFCS MAY SHY AWAY FROM LENDING AND CREDIT CARD PARTNERSHIPS
• ADDITIONAL CAPEX REQUIRED FOR DEVICE STRATEGY, MARKETING AND BRANDING TO DRIVE GROWTH AND REGAIN TRUST
• CHALLENGES REMAIN IN OBTAINING REGULATORY LICENCES FROM OTHER BFSI REGULATORS
• PAYTM'S HOPES FOR A FULL-SCALE BANKING LICENCE DASHED
• EQUITY INVESTORS IN HOLDING COMPANY TO REASSESS THEIR RETURNS EXPECTATIONS AND FUTURE INVESTMENTS

VIJAY SHEKHAR SHARMA's digital payments journey has weathered many a storm over the years. Now, the 46-year-old's situation is akin to rowing a boat constantly springing leaks. Sharma fixes one hole, only for another to spring up.

Let's go back a bit. Sharma's One 97 Communications Ltd (OCL), founded in 2000, pioneered the use of QR codes at merchant outlets much before the demonetisation in 2016, giving its brand, Paytm, a head start. Soon after QR codes became popular, the government came up with the Unified Payments Interface (UPI), sparking a revolution in the digital payments space. UPI levelled the playing field, and service providers such as Google Pay and PhonePe cornered a lion's share of this. While demonetisation did give a boost to payments firms, it became clear that Paytm's UPI business was financially unviable because of the near absence of the merchant discount rate (MDR)-a fee that a merchant is charged for accepting payments.

Sharma then diversified Paytm, which has SoftBank and Alibaba as investors, into a loan distribution and investment products firm, using the payments insights of customers and merchants. Just as things began to normalise after Covid-19, regulatory scrutiny over Chinese ownership created uncertainty. Sharma quickly reduced Alibaba affiliate Ant Financials' stake and increased his own to 19.4%.