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Paytm had earlier this week issued a statement claiming leadership position on the UPI platform. Photo: Hemant Mishra/Mint
Paytm had earlier this week issued a statement claiming leadership position on the UPI platform. Photo: Hemant Mishra/Mint

PhonePe says Paytm’s claims on UPI are ‘misleading’

While Paytm 'seems to be leading the market' in terms of number of UPI transactions, the average value of such transactions is much lower at Rs40 compared to its own Rs1,800, says PhonePe

Bengaluru: Flipkart’s mobile payments arm PhonePe has taken a swipe at India’s largest digital payments firm Paytm, questioning the latter’s claim of being the largest player on the unified payments interface (UPI) platform, escalating a war of words between India’s two biggest consumer internet firms that count Japan’s SoftBank Group Corp. as a common investor.

In a blog post on Thursday, PhonePe termed Paytm’s claim of being the biggest payments network on UPI as “unidimensional" and “misleading", and claimed that broad-based adoption of UPI has not happened on Paytm yet.

“The average PhonePe customer does about five transactions per month, while the comparable figure for Paytm is 525. This is simply not representative of normal user behaviour on the UPI network," the blog post authored primarily by PhonePe’s founder and chief executive officer Sameer Nigam said.

This is not the first time that PhonePe has questioned Paytm’s expansion in India’s booming digital payments business.

In January, in a tweet on microblogging site Twitter, Nigam had indicated that Paytm’s volumes on UPI had been inflated by Re1 cashbacks. Nigam later deleted the tweet.

The latest war of words also comes weeks after Paytm founder Vijay Shekhar Sharma lambasted WhatsApp’s new payments service, calling for government intervention in what he called an “unfair playing field".

Mint reported in February that Paytm, the runaway leader in payments with nearly 300 million registered users, stands to lose most if Facebook Inc.-owned WhatsApp can push its payments service to the 230 million people who use its app frequently to send messages, pictures and other content.

Paytm declined to comment for this story.

PhonePe also pointed out that Paytm’s average transaction value currently lags PhonePe’s by a long way. “Just 40,000 unique consumers did 500+ transactions each in February on Paytm. Paytm’s average transaction value is less than Rs40. In contrast, 6,000,000 unique customers did 5 transactions each in February on PhonePe. Our average transaction value is over Rs1,800," said PhonePe.

To be sure, PhonePe’s average transaction rate is higher given the fact it is largely used on parent Flipkart’s e-commerce platform for buying higher ticket size items such as phones and electronics.

Both PhonePe and Paytm seem to be threatened by WhatsApp’s entry into the mobile payments space and it remains to be seen what kind of impact the entry of the largest messaging platform will have on India’s nascent digital payments ecosystem.

“The only logical explanation for this huge difference in average transaction value (Rs40 on Paytm vs Rs1,820 on PhonePe) and Paytm’s startlingly high ATPC (525/user/month) is that Paytm’s transaction volumes are clearly influenced by significant per-transaction cashback incentives that appeal to a very small population," PhonePe added.

PhonePe added that Paytm’s current overall transaction value lags UPI’s overall transaction value. “At an overall network level, UPI’s overall transaction value is Rs1,116/transaction. For Paytm, the number is a paltry Rs38 which further corroborates these are all cashback triggered low ASP transactions," said PhonePe.

PhonePe CEO Sameer Nigam on Friday, however, clarified that the percentage of retail transactions from Flipkart account for less than 3% of overall transaction volumes and transaction value on PhonePe

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