Flipkart-owned payments company PhonePe has taken a swipe at Paytm’s claim of being the largest player on the Unified Payments Interface (UPI) platform, calling them “uni-dimensional and misleading”.
In a blog post, PhonePe said while Paytm “seems to be leading the market” in terms of the number of transactions, the average value of such transactions is much lower at Rs 38 compared to its own average transaction value of Rs 1,800.
The average PhonePe customer does about five transactions per month, while for Paytm that number is 525. The blog post claimed that the high number of transactions on Paytm was “simply not representative of normal user behaviour on the UPI network.”
“Just 40,000 unique consumers did 500+ transactions each in February on Paytm. Paytm’s average transaction value is less than Rs 40. In contrast, 6,000,000 unique customers did 5 transactions each in February on PhonePe. Our average transaction value is over Rs1,800,” the PhonePe blog post reads.
The only explanation for this vast gulf in figures according to PhonePe is that “Paytm’s transaction volumes are clearly influenced by significant per-transaction cashback incentives that appeal to a very small population.” The post also pointed out that Paytm’s average transaction of Rs 38 is much lower that UPI’s overall average value per transaction of Rs 1,116.
This is not the first time that PhonePe has questioned Paytm’s expansion in India’s booming digital payments business.
In January, PhonePe co-founder Sameer Nigam had indicated in a tweet that Paytm’s volumes on UPI had been inflated by Re 1 cashbacks. Nigam later deleted the tweet.
*Edit: A previous version of the article speculated that the high average transaction rate for PhonePe could be due to big-ticket purchases made on Flipkart’s marketplace. PhonePe has clarified that Flipkart purchases account for only 3% of all transactions on the platform.
Last week Paytm had claimed that UPI based transactions on its platform touched 68 million in February, which is up 33.3% from 51 million transactions in January. This meant that 40% of all UPI transactions were handled by Paytm giving it the lead in the total number of transactions for the month.
The company started accepting UPI payments on its platform in November 2017.
After its initial UPI rollout in November 2017, the company registered 33 million UPI transactions. Paytm has claimed that it has around six million merchants on its platform at present.
UPI players sniping at each other
After Whatsapp launched its own UPI based payments service in February, incumbent payment services in India felt that the Facebook-owned company was playing by its own rules. Most vocal among them was the PayTM CEO, Vijay Shekhar Sharma. In an interview with CNBC Sharma said, “Whatsapp is killing India’s ‘beautiful, open UPI system’, and that it has gotten preferential access to UPI. He says that “it does not allow transactions to non-Whatsapp UPI handles, UPI handles created via other apps, does not include passwords and logins, and QR code scanning. Everyone else has 3 factors of authentication: login, password and then UPI pin. Whatsapp doesn’t have login and password.”
The National Payments Corporation of India (NPCI) had to release a statement responding to the controversy, referring to Whatsapp’s UPI rollout as a “beta launch with limited user base of 1 million and low per transaction limit.”