ETtechPaytm and Ola - two of India’s largest startups - have joined hands with private sector lender IndusInd Bank to apply for a New Umbrella Entity (NUE) licence that will allow them to set up a national payments network with powers similar to incumbent, National Payments Corporation of India.
Vijay Shekhar Sharma-led Paytm is expected to play a leading role in the consortium, in which Ola Financial and IndusInd Bank will have significant stakes, three people aware of the matter told ET.
ET reported previously that Amazon, along with ICICI Bank and Axis Bank, are also in the fray for the licence. Two other consortiums led by the Tata Group and Infibeam Avenues are also learnt to be in the reckoning.
According to a source close to the development, the synergies between consortium partners in the Paytm, Ola, IndusInd partnership will be the key differentiator for the proposed NUE.
“The diversity and technology leadership of consortium partners will be a unique differentiator for this consortium,” the person said.
“This set understands consumers better and has successfully delivered national-level complex businesses leveraging technology in the best way. India's digital payments boom requires robust multiple payment products for the next level of growth," the source added.
Paytm, Ola, IndusInd, Centrum Finance, Zeta Pay and EPS did not immediately respond to ET’s queries seeking comment.
“Paytm is a dominant player in the offline payments segment, whereas IndusInd has a strong presence in small Indian towns. Together, they can form a payments network that can be focused on semi-urban and rural acceptance,” said another person.
Paytm is one of India’s leading fintech brands with payments business across categories such as Unified Payments Interface (UPI), wallet, offline and QR code. Through its licensed payments bank, it also runs a payment gateway service for merchants.
Separately, the SoftBank- and Ant Financial-backed startup has also forayed into lending, insurance and brokerage businesses with ambitions to turn into a full-fledged financial services player.
An NUE license can give Paytm more autonomy in developing new suites of bundled payment and financial products.
Meanwhile, Ola Financial, the financial services arm of the Noida-based ride-hailing startup, has targeted to build a super app backed by a wide range of financial services. The company raised Rs 200 crore from Falcon Edge and Matrix Partners, ET reported in May last year.
Paytm Payments Bank was fifth on the UPI charts and processed more than 145 million UPI transactions in January. It also gained market share from Google among UPI apps in the same month.
IndusInd Bank, meanwhile, processed just 19.48 million such transactions.
For IndusInd Bank, its digital transaction mix continues to grow with 89% of transactions happening digitally and 70% of requests also processed digitally. Its volume or service requests increased 62% on digital channels in a year.
In August last year, RBI released a framework for Indian and foreign firms to set up for-profit NUEs to "de-risk" India's burgeoning payments ecosystem, which in recent weeks has been subject to increased downtimes and mass-outages due to system vulnerabilities.
These NUEs can also set up payment systems to rival UPI and roll out new products in digital payments. NPCI is a not-for-profit undertaking, controlled largely by banks and regulated by the central bank.
Vijay Shekhar Sharma-led Paytm is expected to play a leading role in the consortium, in which Ola Financial and IndusInd Bank will have significant stakes, three people aware of the matter told ET.
Non-bank lender Centrum Finance, along with fintech companies Zeta Pay and Electronic Payment and Services (EPS), are also expected to be part of the group that will submit its proposal to the Reserve Bank of India before the deadline expires on February 26, they said.
ET reported previously that Amazon, along with ICICI Bank and Axis Bank, are also in the fray for the licence. Two other consortiums led by the Tata Group and Infibeam Avenues are also learnt to be in the reckoning.
According to a source close to the development, the synergies between consortium partners in the Paytm, Ola, IndusInd partnership will be the key differentiator for the proposed NUE.
“The diversity and technology leadership of consortium partners will be a unique differentiator for this consortium,” the person said.
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“This set understands consumers better and has successfully delivered national-level complex businesses leveraging technology in the best way. India's digital payments boom requires robust multiple payment products for the next level of growth," the source added.
Paytm, Ola, IndusInd, Centrum Finance, Zeta Pay and EPS did not immediately respond to ET’s queries seeking comment.
“Paytm is a dominant player in the offline payments segment, whereas IndusInd has a strong presence in small Indian towns. Together, they can form a payments network that can be focused on semi-urban and rural acceptance,” said another person.
Paytm is one of India’s leading fintech brands with payments business across categories such as Unified Payments Interface (UPI), wallet, offline and QR code. Through its licensed payments bank, it also runs a payment gateway service for merchants.
Separately, the SoftBank- and Ant Financial-backed startup has also forayed into lending, insurance and brokerage businesses with ambitions to turn into a full-fledged financial services player.
An NUE license can give Paytm more autonomy in developing new suites of bundled payment and financial products.
Meanwhile, Ola Financial, the financial services arm of the Noida-based ride-hailing startup, has targeted to build a super app backed by a wide range of financial services. The company raised Rs 200 crore from Falcon Edge and Matrix Partners, ET reported in May last year.
Paytm Payments Bank was fifth on the UPI charts and processed more than 145 million UPI transactions in January. It also gained market share from Google among UPI apps in the same month.
IndusInd Bank, meanwhile, processed just 19.48 million such transactions.
For IndusInd Bank, its digital transaction mix continues to grow with 89% of transactions happening digitally and 70% of requests also processed digitally. Its volume or service requests increased 62% on digital channels in a year.
In August last year, RBI released a framework for Indian and foreign firms to set up for-profit NUEs to "de-risk" India's burgeoning payments ecosystem, which in recent weeks has been subject to increased downtimes and mass-outages due to system vulnerabilities.
These NUEs can also set up payment systems to rival UPI and roll out new products in digital payments. NPCI is a not-for-profit undertaking, controlled largely by banks and regulated by the central bank.
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