Google and Walmart are swiftly attracting customers away from Paytm, an early leader in India’s digital finance scene, now grappling with new regulatory challenges and the looming threat to one of its essential payment services.

What Happened: Data from the National Payments Council of India revealed a 14% drop in Paytm’s transaction value on the country’s Unified Payments Interface (UPI) to ₹1.65 lakh crore ($19.9 billion) from January.

In contrast, Walmart’s PhonePe and Google’s GPay saw their transaction values climb, highlighting a shift in user preferences even before Paytm faces a direct impact from the regulatory restrictions set to commence on March 15.

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Despite Paytm’s assurances of uninterrupted service post-March 15, investor confidence has waned, with the company’s stock plunging nearly 50% since late January when the Reserve Bank of India directed Paytm Payments Bank to pause most of its operations. This bank, crucial to Paytm’s operations but separately managed, was forced to seek alternative banking partners rapidly.

Vijay Shekhar Sharma, Paytm’s founder, remains optimistic, stating his company will emerge stronger from these regulatory hurdles. PhonePe and GPay have consistently outperformed Paytm in terms of UPI transaction volume and value, even before the recent setbacks. This trend underscores the competitive landscape of India’s digital payments ecosystem, where success hinges not just on processing transactions but also on leveraging customer bases for cross-selling financial products.

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