Troubled fintech major Paytm is reportedly set to enter the ride-hailing sector by offering auto-rickshaw rides in metro cities like Delhi, Bengaluru and Chennai through the open network for digital commerce (ONDC).

What Happened: The ride-hailing feature on the Paytm app is still in testing mode and visible only to some users, Moneycontrol reported. Over the past two years, the fintech major has gradually tested and gone live with ONDC in multiple e-commerce categories like food delivery, grocery fashion and electronics, the report said. Its latest venture could rival market leaders Ola and Uber.

Namma Yatri acts as the seller-side app for the service. Nandan Nilekani’s Beckn Foundation-backed app also operates several consumer-facing apps of its own for ride-hailing on ONDC.

In the last couple of years, Namma Yatri has enabled 3.73 crore rides in 7 cities, including Bengaluru, Delhi, Kolkata, and other metros. However, most of these were auto rides, and the company is also starting cab bookings across cities as it looks to close series A funding.

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Namma Yatri makes money on these trips through a subscription model for drivers and does not charge any per-ride commission. But, sources told the publication that buyer-side apps could charge the drivers a fee per ride for finding customers.

The ONDC features on the Paytm app are operated by a separate entity called PAI Platforms. Although the fintech company does not own any stake in this entity, it is backed by Paytm founder Vijay Shekhar Sharma.

PaiPai, an ONDC app by PAI Platforms, was mistakenly launched ahead of schedule on the Google Play Store earlier this month and has now been removed. The app was developed by the fintech major’s parent entity One97 Communications, according to its listing details on the Google Play store that were visible earlier.

Multiple tech unicorns, such as Ola, PhonePe, Meesho and Shiprocket, have taken a bet on the government-backed ONDC that is aimed at breaking the stranglehold of a few players like Amazon, Flipkart, Zomato and Swiggy on online retail in the country.

Meanwhile, the volume of monthly retail purchases on the ONDC has grown six times in the last six months to hit 3.6 million in March, compared with over 600,000 in September last year, according to people close to the developments.

Paytm has been struggling ever since the Reserve Bank of India's extensive restrictions on Paytm's payments bank operations, prohibiting new deposits and credit transactions since March. The company’s share in the UPI market has also taken a hit.

Price Action: Paytm’s share had hit a 5% upper circuit in early trade on Thursday and was locked at ₹333.

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