Digital wallet companies such as Paytm, Mobikwik and others may face stiff competition from banks who are also popularising their payment wallets, feel some experts. Though a company like Paytm which is the number one in India in the digital payment's space will continue to dominate the market in the immediate future, the banks may overtake it in the times to come. As per media reports, besides the merchant establishments, Paytm is trying to tie up with multiple agencies such as buying metro cards for metro commuters in Mumbai, Delhi and Hyderabad and also with different public transport companies for bus tickets. This can be a step to further penetrate into different areas for digital payments.
“The government is trying to push the Unified Payment Interface (UPI) system in banks and is trying its best to popularise different banking apps. In the long run, the banks can pose stiff competition to these digital wallet companies such as Paytm, Mobikwik etc because the banks will eventually charge lesser transaction charges when compared to these digital wallet companies. Customers will also have more faith in these banks as they are already their customers and will eventually make payments through the digital apps of these banks,” Alok Shende of Ascentius Consulting, Mumbai told THE WEEK.
Off late, having made its mark in the digital wallet space, Paytm had also launched 'Paytm Payments Bank' recently and wants to make further inroads in India. The other three operational payments banks are the Airtel Payments Bank, India Post Payments Bank and Fino Payments Bank. Paytm's payment bank is being termed as the country's only mobile-first bank. In a payment bank customer can open a savings bank account and have deposits of upto Rs 1 lakh. However they cannot borrow money from them as such banks cannot lend money to its customers.
“The concept of a payments bank has still not taken off in India in a big way and it needs to be seen as to how the company (Paytm) succeeds in the long run in the country which is still dominated by traditional and conventional banks,” adds Shende.
On the other hand, another expert such as Kris Lakshmikanth, the CEO and founder of Head Hunters India Limited, feels that even if Paytm and other digital wallet companies tie up with different retail outlets, the banks will have an upper hand through their Apps as most of them have tie ups with these retail companies as many of them have their current accounts with different banks. “Banks will eventually tie up with them for digital payments. Even a small time grocery owner will have a current account with a conventional bank and the banks will try to push their wallets to them and then in turn will push it to their customers,” added Lakshmikanth.
These experts further point that Paytm's e-commerce business in the form of Paytm Mall is also surviving mainly on investor money such as Alibaba which wants to take on the likes of Flipkart and Amazon through discounts and sales. “It needs to be seen that how long Paytm Mall will be able to sustain its discounts and sales if the investor money dries out,” said Shende.
On the other hand, Lakshmikanth feels that Paytm Mall will eventually be taken over by Alibaba in the long run.
