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Tag: payments banks

  • Digital payments growth buoyed by rise in acceptance channels, lower ticket size: Worldline

    Digital payments growth buoyed by rise in acceptance channels, lower ticket size: Worldline

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    The rapid growth in digital payments in India is being led by a robust increase in the payments acceptance infrastructure channels, according to a report by Worldline India which showed UPI QR codes grew 57 per cent from July 2022 to 31.7 crore as of December 2023, and Bharat QR codes grew 32 per cent to 59.6 lakh.

    Point of Sale (PoS) terminals expanded 26 per cent between July 2022 and December 2023 to reach 85.6 lakh. Private sector banks dominated the space with a market share of 73 per cent, followed by PSU banks at 18 per cent. Payments banks had a share of 8 per cent, and foreign banks of 1 per cent. Axis Bank, ICICI Bank, HDFC Bank, State Bank Of India, RBL Bank, Paytm Payments Bank, IndusInd Bank, Kotak Mahindra Bank, Yes Bank, and Canara Bank accounted for 94 per cent of terminals deployed.

    UPI transactions grew 56 per cent yoy in terms of volume to 6,577 crore as of December 2023 whereas the value of transactions grew 44 per cent to Rs 99.68 lakh crore. The average ticket size continued its downward trend, declining 8 per cent to Rs 1,515, indicating more profound integration of UPI particularly in smaller or micro transactions led by a surge in person-to-merchant (P2M) transactions, as per Worldline’s India Digital Payments Report for H2 CY23.

    Number of P2M transactions rose 77 per cent to 3,873 crore, processing payments worth ₹25.43 lakh crore, an increase of 62 per cent on year. In comparison, volume of P2P transactions surged 34 per cent to 2,704 crore and the amount of transactions was up 38 per cent at ₹74.24 lakh crore. The average ticket size for P2M transactions fell 9 per cent to ₹656, whereas for P2P payments it grew by 4 per cent on year to ₹2,745. 

    In terms of volume and value, PhonePe, Google Pay and Paytm were the dominant UPI app players, accounting for 95.4 per cent of transaction volume and 93 per cent in terms of value. State Bank of India, HDFC Bank, Bank of Baroda, Union Bank and Punjab National Bank were top UPI remitter banks whereas Paytm Payments Bank, YES Bank, SBI, Axis Bank and ICICI Bank were top beneficiary banks.

    “This trend underscores users’ growing confidence and familiarity with smartphone-based payment methods. The proliferation of Point of Sale terminals has reached unprecedented levels, concurrent with the ascendance of mobile payments as a dominant transaction avenue. This underscores the necessity for FinTechs to adjust to a diverse array of payment channels,” said Ramesh Narasimhan, India CEO, Worldline.

    Volume of mobile transactions increased 38 per cent to 6,295 crore in H2 CY23 whereas the value of transactions rose 31 per cent to ₹152.33 lakh crore. Between January and December 2023, the volume of transactions was up 34 per cent whereas value was up 33 per cent. Here too, the average ticket size decreased by 5 per cent to ₹2,420.

    The number of toll tags issued grew 45 per cent to 8.12 crore. The volume of transactions through FasTags were 13 per cent higher at 189 crore and the value was up 20 per cent to ₹31,948 crore.

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  • Administrator likely to be appointed at Paytm Payments Bank after March 15

    Administrator likely to be appointed at Paytm Payments Bank after March 15

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    With less than a fortnight to go for Paytm Payments Bank to wind down its operations, highly placed sources in the banking circles say the bank could be the first significant instance in over two decades where the Reserve Bank of India may not hesitate to take a drastic step such as cancellation of its bank license. “If that be the case, an administrator could be appointed at the bank to oversee certain critical aspects,” said a person with knowledge of the matter.

    Failed transactions

    A move of this nature is likely after three–four instances of failed due diligence done on Paytm Payments Bank in a bid to take over its business. Being a deposit-taking entity, it is learnt that a few large banks, including a rival payments bank, are interested in Paytm’s wallet business and have shown interest in taking over Paytm Payments Bank. “However, with reports of inadequate KYC compliance looming over the bank, the interested parties stepped back,” said a banker aware of the matter.

    According to a few more sources, the regulator had sounded off the interested entities acquiring Paytm Payments Bank as they would be at their own risk and no dispensation on the compliance front would be extended to them. “This was a deterrent for any transaction to go through,” said the person quoted above.

    It may be noted that on February 26, the board of Paytm Payments Bank was reconstituted with new members and Vijay Shekar Sharma stepped down as the chairman of the bank. Subsequently, One97 Communications (OCL) terminated all its contracts with the bank. Sharma holds 51 per cent equity in Paytm Payments Bank, while the rest is held by OCL.

    Next steps

    Another banker added that, with the RBI explicitly mentioning in the FAQ dated February 16 that no credits can be made to Paytm Payment Bank’s savings account and no fresh deposits with partner banks through Paytm Payments Bank will be allowed after March 15, 2024, indicates that the bank is unlikely to be in existence for long.

    However, for depositors who may not have withdrawn or closed their accounts with the bank within the slated timelines, their sums will be transferred to ‘unclaimed deposits’ account under the “Depositor Education and Awareness” (DEA) Fund Scheme, 2014. The role of the administrator would be to ensure that any deposit claims made thereafter is satisfactory repaid to the depositors. As of March 31, 2023, Paytm Payments Bank held ₹3,285.27 crore of deposits, with ₹2,955.96 crore of deposits with 1–3 year maturity.

    License revocation likely

    Paytm Payments Bank faced with risk of license revocation after March 15

    Move likely as talks with 3 – 4 large banks for takeover fail

    Inadequate compliance by Paytm Payments Bank seen as reasons for failed takeover talks

    RBI may appoint an administrator to oversee unclaimed deposits after March 15

    Vijay Shekhar Sharma holds 51 per cent stake in Paytm Payments Bank; rest with One97 Communication

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  • Rural areas have the least presence of payments banks’ offices: Crisil

    Rural areas have the least presence of payments banks’ offices: Crisil

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    Rural areas have the least presence of payments banks’ (PBs’) functioning offices, whereas urban areas have the highest number of functioning offices, according to Crisil Market Intelligence and Analytics (MI&A).

    At the end of December, 2022, maximum number of offices were in urban areas (44 per cent) and semi-urban (40 per cent) areas, followed by metropolitan (11 per cent) and rural areas (5 per cent). Six payments banks had a total number of 741 functioning offices at the end of last year.

    According to the credit rating agency, the functioning offices of payments banks are likely to grow in rural areas due to the increased focus of the government on financial inclusion.

    Airtel Payments Bank, India Post Payment Bank (IPPB), Fino Payments Bank, PayTM Payments Bank, NSDL Payments Bank and Jio Payments Bank are the six PBs that are currently in operation.

    PBs facilitate small savings and provide payments and remittance services to migrant labour, low-income households, small businesses and other unorganised sector entities.

    In a note prepared on the basis of National Securities Depository Ltd’s DRHP for IPO, the agency said these functioning offices form a very small proportion of total number of touch points of PBs as they are leveraging on the vast network of merchants and doorstep service providers to provide banking and related services in the last mile.

    For instance, NSDL Payments Bank had 23 lakh touch points as of December 2022, while Paytm Payments Bank had 2.1 crore touch points across India as of FY21. Fino Payments Bank had a merchant network of 14 lakh banking points at the end of March 2023.

    With the penetration of services such as credit, insurance and mutual funds are still at a very low level, Crisil underscored that cross-selling to retail unserved and/ or underserved customers remains an attractive opportunity for payment banks.

    The share of total credit outstanding is about 8 per cent in rural areas, 13 per cent in semi-urban and 79 per cent in urban areas as of March 31, 2023, per the note.

    Although mutual fund penetration (mutual fund assets under management as a percentage of GDP) has grown from 4.3 per cent in 2001-02 to about 14.5 per cent in 2022-23, penetration levels remain well below that of other developed markets, presenting an opportunity for payments banks to cross-sell investment products to customers in rural and semi-urban areas.

    At the end of March 2022, PBs deposits reached ₹9,954 crore and their investments in government securities reached ₹9,924 crore, per RBI data.

    PBs can hold a maximum balance of ₹2 lakh per individual customer at the end of the day. It can function as a business correspondent of another bank, and distribute simple financial products like mutual fund units and insurance products. However, they cannot undertake lending activities.

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