New Delhi: One 97 Communications Limited, the holding company for PayTM, has announced the launch of Paytm Postpaid, a credit line through UPI allowing existing users a Rs.60,000 per month credit limit, excluding peer to peer transactions. This feature, launched in partnership with Suryodaya Small Finance Bank, is expected to directly challenge the credit card industry, which has witnessed its growth momentum on the back of credit transactions via UPI since 2022.
“In India, families and individuals often look for a little extra flexibility to manage their everyday expenses with ease. Whether it’s paying at a local store, managing household bills, or shopping online, this solution is designed to make life simpler.This launch reflects our commitment to offering secure, compliant, and innovative payment solutions that truly put consumers first.” Avijit Jain, Chief Operating Officer – Lending at Paytm, said in a press release to the bourses.
Paytm postpaid- A window to a lost opportunity?
For Paytm, this could be a game-changer, given that the company has lost out to Flipkart-based PhonePe and Google Pay to become a distant 3rd in the UPI market. Additionally, the National Payments Corporation of India (NPCI), the payment body overseeing UPI, is seeking to introduce a total market cap to address the market dominance in the sector. According to its guidelines, both companies have to reduce their market share to 30 per cent by December 2026.
For all practical purposes, the UPI ecosystem has become saturated, with almost 85% of all digital transactions taking place through UPI. Nearly 86.3% of Indian households have access to the internet through at least one phone, with nearly all individuals aged 15-29 using UPI for most transactions, according to a survey released by the Ministry of Statistics.
With this announcement, Paytm is looking to expand its market share just in time to boost its market share, before others jump into the fray. This announcement comes at a time when the company’s performance has been encouraging, having attained profitability since listing in 2021.
“…we’ve restored the high UPI success rates that Paytm has long been known for. This has been made possible by the deep integration with our partner banks, our focus on technology, and the continued support from the National Payments Corporation of India (NPCI)… Once the market share caps are imposed, we are ready to move faster and go deeper on market expansion,” Paytm founder Vijay Shekhar Sharma said in a letter to shareholders on August 5.
“We’re also building value-accretive services that help merchants grow and retain their customers. These are products that extend our stack and unlock monetization beyond transactions,” he added.
Challenges ahead
Currently, about 8% of all credit card transactions are processed via UPI. The credit card industry has grown by leaps and bounds since 2021, with a total of 108 million active cards issued till December 2024. About 75% customers are using their linked Rupay credit cards to make impulsive purchases, according to a behavioural study.
Despite this, most UPI transactions are settled from the bank accounts, with credit growth numbers not that encouraging yet.
For now, customers willing to use the Paytm postpaid have to complete their KYC and link their accounts with their Aadhaar cards. The customers will get 30 days of credit after the KYC and background checks are approved. The service is currently being rolled out to a select few, and will be expanded in the time to come. Will this ‘Spend Now, Pay Next Month’ facility help Paytm break the PhonePe, Google Pay duopoly? Only time will tell.
