Interestingly, both PhonePe and Google Pay saw an increase in transactions.
Data released by the National Payments Corporation of India (NPCI) shows that Paytm witnessed a fall in its Unified Payments Interface transactions. It was reduced to 1.2 billion UPI transactions in March from 1.3 billion in February. In January, it was 1.4 billion.
This drop in transactions comes after the Reserve Bank of India (RBI) imposed regulatory restrictions on Paytm Payments Bank for persistent noncompliance with regulatory practices and not following KYC guidelines.
The restriction was imposed by the RBI on January 31, and it was applicable after February 29. Further, the Financial Intelligence Unit-India (FIU-IND) also imposed a penalty of Rs. 5,49,00,000 on Paytm Payments Bank under the Prevention of Money Laundering Act (PMLA) of 2002. The penalty was imposed in March 2024.
“The penalty pertains to issues within a business segment that was discontinued two years ago. Following that period, we have enhanced our monitoring systems and reporting mechanisms to the FIU,” said a Paytm spokesperson as per the Business Standard.
Under the restriction, credit restrictions, top-ups, and withdrawals of credit will not be permitted in the customer account. After Paytm Payments Bank was stopped, the fintech platform moved to other banks, including Yes Bank, HDFC Bank, State Bank of India, and Axis Bank. These banks will act as third-party application providers. However, there has been a drop in the number of users.
Interestingly, both PhonePe and Google Pay saw an increase in transactions. Google Pay witnessed 5 billion transactions in March, an increase from 4.7 billion in February (6.3 per cent increase). PhonePe, on the other hand, saw 6.5 billion transactions in March, up from 6 billion in February.