INCON-XVII 2024 ISBN:978-93-87665-16-3

An inner view into UPI – Unified Payments Interface – Saga of PAYTM

Srinivas Tumuluri
Dr. Srilatha Palekar
Abstract:
Unified payments Interface is a platform that allows account holders to carry on transactions up to
2 lakhs maximum in a day. An individual can use this platform for transfer of funds, making
payments or requesting money through mobile phone which allows the features.

The structure of UPI address is like mailed and taken as financial address. Every individual is a
separate entity where receiving, paying and transferring of funds can be done instantly.

National Payments Corporation of India also known as the NPCI launched UPI In conjunction
with the Reserve Bank of India and Indian Banks Association, NPCI has framed this network. It
is similar in mechanisms like the Ru Pay system through which debit and credit cards function.

UPI app was launched in Jan 2016 and as on now almost all banks have adopted the original
version or a version as per their requirements.

Key words: UPI, NPCI, Individual

Paytm Introduction:

An individual makes bill payments or transferring cash was by using cash or by cheque in the past.
For transferring cash taking D.D was an important instrument and visiting bank for this purpose
was needed and bank working use to start at 10 a.m. only. There were lot of hurdles in doing
business also for this reason.

In 2010 Paytm entered the market with innovative digital app and this has changed the way
transactions and bill payments were being made. This means the way financial transactions were
being operated has been changed and it can be said a new era has been started in Indian financial
structure. E-Parent wallet business was introduced in 2010 by Mr. Vijay Shekhar Sharma and
One97 .It was given RBI approval.

ASM Group of Institutes, Pune, India 14

 INCON-XVII 2024 ISBN:978-93-87665-16-3

Paytm was a platform for recharging cell phones in the initial stage and making payments
online. Later it has now developed into a platform for all types of transactions, and the ability
was to process 5000 transactions a second. The e-wallet is protected, and the app uses SSL
128-bit encryption technology that has been verified by Verisign, ensuring the security of any
online data related to the user.

Growth of Paytm:
After demonetization, the payments platform rose in usage, reaching 200 million users by
November 2017. In 2017, the payments platform also introduced the Paytm Payment Bank.

Paytm’s entry into financial services operations helped many businesses and also improved
lives of many Indian’s. It also helped to establish a sizable new-age financial services
conglomerate and provided millions of small businesses with platforms for payments, mutual
funds, insurance, and banking services.

"Paytm Karo" became the legendary catchphrase after demonetization and every Indian got hooked
on to when it came to online shopping. In 2017, the company became the country's first-ever
payments app to surpass the threshold of 100 million downloads. 2021 saw Paytm reach of 1.2
billion monthly transactions (as of March 1, 2021) with over 150 million monthly active users.

Paytm IPO - Making history

Paytm issued the biggest ever IPO in India, Paytm scripted history on Thursday (November 18,
2021). Its public offer is bigger than Coal India's Rs 15,200 crore IPO in 2010.

Though the debut was not attractive, Paytm managed to cross the milestone of Rs 1 lakh crore
market capitalisation. The digital payments firm reached a market cap of Rs 1.19 lakh crore on
BSE.

The share was listed at Rs 1,955 on BSE, a discount of 9.06% to the issue price. Later, the market
cap of the firm fell to Rs 1.10 lakh crore, as the share further dipped 20.47% to Rs 1,704 on BSE.

On NSE, the share of Vijay Shekhar Sharma-led Company opened at Rs 1,950, a 9.30% discount
to the IPO issue price. The share further fell 20.93% to Rs 1,700 on NSE.

ASM Group of Institutes, Pune, India 15

 INCON-XVII 2024 ISBN:978-93-87665-16-3

Among the fintech companies Paytm is the one that's listed on the bourses. In spite of being a loss-
making company, the digital payments giant managed to create a strong buzz around its IPO.

The public offer received bids for 5.24 crore equity shares against the offer size of 4.83 crore
shares, according to information available from stock exchanges. Qualified institutional buyers
(QIBs), who were less than enthusiastic in participating in the IPO in the initial two days, flooded
the issue, seeking 1.59 times the shares reserved for them.

Market share
Paytm has over 40 per cent of India's digital payments market in the country's biggest cities.
Though it has yet to turn a profit, the company has benefitted from an overwhelming interest from
foreign and Indian investors seeking a stake in India's surging internet economy.

Despite all efforts Paytm was a loss making company and its revenues were falling down
constantly.

Sequence of developments in Paytm Cycle:

Year 2000- One 97 Starts as Value Added services firm.

Year 2010- Inception of Paytm
Year 2012- Launch of Paytm Gateways
Year 2014- Launch of Paytm Wallet and Paytm Labs
Year 2020- Enters into Credit card Business
Year 2021- Launches IPO
Paytm problems with regulatory:
In 2018 Problems were regarding adhering to KYC documents records to be maintained.
In July 2021 RBI pulled up Paytm for providing wrong information about transfer of Bharat bill
business to the payments bank. Penalty of Rs 1 crore has been imposed on Paytm then.

In 2022 RBI raised issue of Material supervisory concerns and asked bank to appoint audit
committee for auditing its IT department and it has been asked to stop adding new customers.

ASM Group of Institutes, Pune, India 16

 INCON-XVII 2024 ISBN:978-93-87665-16-3

There were allegations regarding China’s link to Paytm’s funds and also data breach to Chinese
companies.

Further unrealistic companies valuation was yet another financial irregularity which saw that initial
price offer was very high and the company found very difficult to sustain that price.

Earlier it was reported that the RBI found that in many cases, the same PAN was linked to
numerous customers.

Present scenario and Paytm response to problem:

Paytm has an expansive network of over 30 million merchants via its platform, with roughly 20
per cent using the services of Paytm Payments Bank Ltd (PPBL) for their financial settlements.
PPBL also acts as the sponsor bank - formally referred to as payment service provider (PSP bank),
for a majority of UPI addresses on the Paytm application. This association is visible in the virtual
payment address (VPA), which uses "@paytm" in it. Now before February 29, Paytm now will
have to transfer all these accounts to third-party banks for the UPI payments to work seamlessly.

In order to ensure compliance with RBI directives eminent personalities from the field of finance
& banking have been roped in by The Board of One 97 Communications Ltd into the advisory
group.As per the management of One 97 they are committed to driving sustainable business growth
while adhering to regulatory and compliance framework.

Conclusion:

Fintech companies play an important role economy development as financial inclusion along with
ease of doing business are important for growth. Also controlling financial irregularities along with
preventing money laundering important for maintaining financial strength of the country.
Preventing data breach and maintain confidentiality are important for security of the country. All
these factors have to be considered before a decision is taken in this regard.

References- 1.Business Research Magazine

2. Various News Papers

ASM Group of Institutes, Pune, India 17

Copyright of International Conference on Ongoing Research in Management & IT is the
property of Audyogik Shikshan Mandal and its content may not be copied or emailed to
multiple sites or posted to a listserv without the copyright holder's express written permission.
However, users may print, download, or email articles for individual use.