Sharma's Paytm UPI payments drop further in March; PhonePe show gains

UPI payments giant PhonePe has outpaced Vijay Shekhar Sharma-led Paytm in the race for monthly active users (MAUs) on their merchant apps.

Data sourced from App Annie reveals that from mid-January to mid-March, PhonePe experienced a 20% increase in MAUs, reaching approximately 11 million.

Contrastingly, Paytm saw a 20% decline, dropping to around 9 million MAUs. The shift occurs amidst a backdrop of over 37 million registered merchant bases for each company as of 2023, highlighting the intensity of the competition.

The impact of RBI's action

The Reserve Bank of India's (RBI) recent sanctions against Paytm have significantly influenced these dynamics. After identifying breaches and non-compliance with regulatory standards in January, the RBI's actions led to a noticeable decrease in Paytm's active users.

Although Paytm later secured approval from the National Payments Corporation of India (NPCI) to continue its UPI services, the initial damage seemed to catalyze a broader migration among merchants and users toward alternatives.

Shifting to other payment solutions

A report highlighted a considerable shift among Kirana stores away from Paytm, favouring other digital payment solutions like PhonePe, BharatPe, and GooglePay. Citing a survey from Kirana Club, it was noted that over 40% of Kirana stores had transitioned to these alternatives since the RBI's actions, with the trend expected to continue. 

While PhonePe leads the merchant app segment, its dominance extends to the consumer-facing UPI payments app market, where it holds almost a 50% market share. 

This is a considerable lead over its closest competitors, Google Pay and Paytm Payments Bank, which hold around 35% and 12% market share, respectively. The data indicates a clear preference among users for PhonePe's offerings for both consumers and merchants.