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Update: Paytm’s chief commerce officer Kiran Vasireddy spoke to MediaNama and clarified that the company is cutting off wallet services to payment aggregation companies. He added that the company has sent notices to “every company” which acts as a payment aggregator though did not disclose a specific number.

Vasireddy added that 0.3-0.4% of Paytm’s transactions comes through such payment aggregators. “We also realized that the number of customers and transactions that were coming through them were far lesser than what we had a direct relationship with. At the end of the day, direct relationships with merchants  will have a better user experience and success rates on transactions,”  he added.

Vasireddy also explained that Paytm’s user experience was hampered as customers had to go through a number of hops to clear a payment and hence opted for a more direct relationship.

Update: Ezetap’s co-founder and CEO Abhijit Bose sent the following statement to MediaNama:

“We respect Paytm’s decision to go direct to merchants.

However, the requirements of consumers and merchants are very different, and a closed loop network of consumers and merchants, especially one in which a merchant must sign up for exclusivity with a single instrument, is both difficult to scale and fundamentally is at odds with what merchants need.

While consumers may eventually end up choosing a preferred payment method, merchants need universal acceptance of app payment instruments from a single, smart,  and easy-to-use solution.

Ezetap’s objective is to ensure that every customer that walks into one of our merchants’ stores can easily transact with whatever instrument and through whatever user experience they prefer. There is a lot of complexity and effort behind the scenes to make that happen in a seamless way.”

Earlier: Digital payments company Paytm announced that it would not offer its wallet services to merchant aggregators such as Ezetap, JustPay and FTCash. It added that partner merchants would have to enter into direct agreements with Paytm and complete the entire process of payment solely on the company’s platform if they wish to access its wallet services.

Paytm also added that move to cut off merchant aggregators from its wallet services is already in effect and the company has already sent termination notices to a few payment aggregators over the last few weeks. The company on its press release said that this was done “to build a captive audience.”

“We want to closely work with our merchants in solving their key challenges. Direct engagement helps us to customize our payment offerings in line with their specific business needs. Merchants are taking cognizance of the fact that using our customized solution will boost their business further and are therefore in favour of this move,” Kiran Vasireddy, a spokesperson for the company said.

We have contacted Paytm regarding the same and will update you once we hear from them. We were unable to contact JustPay and FTCash for comment. A spokesperson for Ezetap said that they were unaware of the development.

Paytm’s move is surprising considering that it tied up with Ezetap for earlier in October 2015 for the platform to accept wallet payments. MediaNama had stated that this was a significant move of interoperability in digital payments. Ezetap at the time had said that it has more than 70,000 Smart POS services points as merchants.

It’s worth noting that earlier last month, Paytm entered multi-channel retail model by tying up with offline players in the mobile and electronic appliances sector and enabling them to list their stores on its e-commerce marketplace.  At the time, Paytm struck deals with 5,500 stores including 4,000 brand exclusive mobile stores and 1,500 large appliance retailers as a part of its omni-channel strategy. Perhaps the direct agreements to access wallet services are done as part of the omni-channel strategy?

Unanswered questions 

Paytm hasn’t told us what it means by merchant aggregators. Online food ordering apps like Zomato, Swiggy and TinyOwl would certainly qualify as merchant aggregators as the facilitate payments to restaurants. Would Paytm withdraw its wallet services for them too? Would it then enter into direct agreements with every restaurant?

Paytm also hasn’t given any indication what the direct engagements with merchants would entail. What are the customized solutions it would offer for “better serving business needs”?

Other tie-ups at Paytm

– Earlier this month, Paytm partnered with PVR, INOX and other unnamed cinema houses to sell movie tickets on its platform. The new initiative would also let users pay for food and other value-added services through their Paytm wallet.

– It tied up with Indian Oil (IOCL) to let users pay for vehicle fuel at petrol pumps through Paytm wallets in Delhi.

– It also struck a deal with Aditya Birla Retail, which runs the supermarket chain “More”, to enable its customers to make payments across its stores.

– In October 2015, Paytm launched QR code based payments in its wallet app, which can be used by shopkeepers or service providers in order to accept digital payments.