There is not enough margin in the payment business for wallets to have a future, says HDFC Bank managing director Aditya Puri
Mumbai: In one of the sharpest comments against e-wallets such as Paytm, HDFC Bank chief Aditya Puri on Friday said such companies which hold on to customers through cash-backs are loss-making and have “no future".
“I think wallets have no future. There is not enough margin in the payment business for the wallets to have a future," Puri, the managing director (MD) and chief executive of the second largest private sector lender, said at the annual Nasscom summit.
“Wallets as a valid economic proposition is doubtful. There is no money in the payments business. The current loss reported by market leader Paytm is Rs1,651 crore. You cannot have a business that says pay a Rs500 bill and take Rs250 cash-back," Puri said. Wallet companies cannot “copy" the “Alibaba model" as well, as the domestic regulators are “better", he said.
The comments are interesting as HDFC Bank also has a wallet service called Chillr. Drawing on his trip to the Silicon Valley to look at evolving scenarios in financial services world, Puri said ApplePay is also “another version of the wallet" and there is no “reimagining" of the bank happening there.
It can be noted that there is a high degree of friction between the entrenched lenders and the standalone wallet players and there have been multiple episodes last month like blocking of money transfer by ICICI Bank into Flipkart’s PhonePe or SBI refusing to let its customers transact on Paytm.
Stating that banks also have wallets for e-commerce transactions, Puri said the standalone e-wallet players depend on banks as an intermediary to get funds. Additionally, the launch of the Unified Payments Interface (UPI) makes it possible for banks to carry out payments transactions faster. “Is this wallet any better than mine, other than a cash- back? I don’t have a Rs1,651 crore loss. You eliminate the loss, then we will talk," he said.