HomeNewsBusinessIndian trade body asks businesses to avoid foreign-owned PhonePe, Google Pay when shifting from Paytm
The Confederation of All India Traders has asked traders to pick the Unified Payments Interface or payment applications offered by Indian banks instead of going for applications backed by foreign firms
February 23, 2024 / 15:54 IST
According to Paytm's official website, the application powers more than 20 million merchants and businesses
India's Confederation of All India Traders (CAIT) has asked brick-and-mortar businesses to avoid switching to foreign-owned payment applications such as PhonePe or Google Pay as traders start shifting away from Paytm, the association's Secretary General Praveen Khandelwal told Moneycontrol.
"We have asked traders to pick the Unified Payments Interface (UPI) or payment applications offered by Indian banks, rather than go for applications backed by foreign companies. We need to stick to our Make in India vision," Khandelwal said.
This recommendation by CAIT, one of the key trade associations in India, follows an advisory issued on February 4 asking businesses to drop Paytm after the clampdown by the Reserve Bank of India (RBI). It also comes at a time when PhonePe expects to gain a share of any potential decline in rival Paytmâs user base.
Trouble began for Paytm when the RBI, on January 31, imposed major business restrictions on Paytm Payments Bank (PPBL), including on accepting fresh deposits and doing credit transactions after February 29. This timeline was later extended to March 15.
Founded by Vijay Shekhar Sharma, home-grown Paytm is widely used by India's brick-and-mortar trading community to accept and make payments. However, since RBI's action, there have been security concerns around using the application.
According to Paytm's official website, the application powers more than 20 million merchants and businesses, while more than 300 million Indians use Paytm to pay at stores.
PhonePe is now owned by the American multinational Walmart, and Google Pay is headquartered in California, United States.
Back in August 2023, the Chief Executive Officer of One 97 Communications Limited, Sharma, and the promoter entities became the largest shareholder in Paytm. In an exchange filing last week, the company informed that its made-in-India devices for QR codes, its sound boxes, and card machines will continue to operate as always beyond March 15, 2024, citing the FAQ issued by the central bank regarding Paytmâs associate, PPBL.
The company has also shifted its nodal account to Axis Bank, by opening an escrow account to ensure seamless merchant settlements.
The restrictions imposed by RBI on Paytm were triggered by a probe, which raised concerns about money laundering and violation of KYC norms by the entity.
This is not the first time concerns have been raised over foreign-backed payment platforms. Supriya Sule, a parliamentarian representing the Nationalist Congress Party, recently alleged that Google Pay and PhonePe are âticking time bombsâ and sought to know what steps the government was taking to check money laundering.
Adrija Chatterjee is an Assistant Editor at Moneycontrol. She has been tracking and reporting on finance and trade ministries for over eight years.
first published: Feb 23, 2024 03:54 pm
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FAQs
India's Confederation of All India Traders (CAIT) has asked brick-and-mortar businesses to avoid switching to foreign-owned payment applications such as PhonePe or Google Pay as traders start shifting away from Paytm, the association's Secretary General Praveen Khandelwal told Moneycontrol.
Is PhonePe banned in India? ›
In 2022, PhonePe obtained licensing from the Reserve Bank of India for operating a Semi-Closed Prepaid Payment system.
Which is better, Google Pay or Paytm or PhonePe? ›
If you are looking for a wallet with a wide range of features and a strong brand recognition, then PhonePe or Google Pay are good options. If you are looking for a wallet that is easy to use and has a low price point, then BharatPe may be a better option.
How did Indian banks give away an opportunity called UPI and its control to PhonePe and Google Pay? ›
Banks have helped facilitate seamless UPI transactions. But they are still hesitant to make large-scale investments in India's largest payments platform. Meanwhile, digital-payment apps lapped up the opportunity and are now taking control of the UPI tech stack.
Why do people prefer PhonePe over GPay? ›
Both apps offer convenience and security when it comes to paying bills and transferring money. However, PhonePe offers a wider range of services such as insurance, mutual funds, and gold investment, so it may be the better choice for those looking for those services. Phonepe Vs Google Pay which is better?
Why is everyone uninstalling PhonePe? ›
In Short. Instant payments app PhonePe came under severe criticism and saw boycott calls on social media a day after company CEO and Co-Founder Sameer Nigam opposed the Karnataka government's proposed jobs quota bill, which aims to secure a portion of jobs in private sector for locals.
Is Google Pay shutting down in India? ›
While Google is discontinuing the GPay app in the US, versions in other markets like India and Singapore will continue to operate.
Which foreign country adopted Indian UPI first? ›
Nepal. Nepal became the first foreign country to deploy UPI as a payment platform. NIPL partnered Gateway Payments Service (GPS), an authorised payment system operator in Nepal, and Bengaluru-based Manam Infotech.
Why is PhonePe most used in India? ›
Success of PhonePe
PhonePe provided consumers with a seamless and secure option to make transactions directly from their bank accounts by connecting with UPI. As a result, the app instantly gained popularity due to its simple layout, quick processing speeds, and useful features.
Who introduced PhonePe in India? ›
Sameer Nigam founded PhonePe in 2015 and serves as its Chief Executive Officer. Before PhonePe, he served as the SVP Engineering and VP Marketing at Flipkart.
As is clear from the above discussion, Phone Pe stands out in terms of its technological prowess, it is faster and more accurate than its competitors. It has an edge in terms of the overall user experience, the user journey is more delightful, smooth and hassle and hick-up free than that of Paytm and Google Pay.
What are the disadvantages of PhonePe? ›
Disadvantages of PhonePe:
- Because when you tap on the PhonePe app on your mobile, the dashboard opens without any authentication. ...
- When you pay with the app, it will appear that processing is still in progress. ...
- It also happens when you pay to a merchant, the message is displayed, payment successful.
Phompe has wallet, and BNPL. Since Last year I have been seeing many of paytm merchants switching to Phonepe. This would mean they are getting better deals with Phonepe naturally people would like to use phonepe itself as they can use BNPL,etc.
Is PhonePe available in India? ›
PhonePe Private Limited is a leading e-commerce payment platform in India.
Can I use phone pay out of India? ›
Can PhonePe be used internationally? Yes! When activated for international use, you can use PhonePe to make QR code payments from your Indian bank account to select merchants abroad.
What is happening with PhonePe? ›
PhonePe launches credit line on UPI
This development follows the Reserve Bank of India's (RBI) recent decision to expand the scope of UPI to include pre-approved credit lines, called 'Credit Line on UPI'. The feature allows consumers to access credit through banks and use it via UPI apps.
Is Mi pay banned in India? ›
Xiaomi has quietly discontinued its finance apps in Indiia.
