Digital India: Why people are ignoring bank UPIs and flocking to Paytm instead

Post demonetization, people flocked to digital wallets for mobile payments instead of bank apps

Long before demonetization and a scramble to find alternatives to cash, India had laid out a unique tech infrastructure for a digital economy.

Bill Gates was so impressed with it on a recent visit that he exclaimed: “India is on the cusp of leapfrogging!”

But leapfrogging only happens with mass adoption. Although Aadhaar had identified and authenticated a billion Indians, and UPI made mobile payments as simple as sending a message or mail, banks dragged their feet over it.

Slip between the cup and the lip

The National Payments Corporation of India (NPCI)  formally launched the UPI in April in which less than 30 eligible banks out of the 150 odd signed up for it.  

Post demonetization, one  would have expected this to be the moment when people turn to the bank apps using UPI. Instead, they flocked to the more user-friendly and familiar digital wallets for mobile payments

The Paytm tipping point

Paytm has already announced that its digital wallet will be merged with the payments bank, which will enable transactions up to INR 100,000 (US$1481). 

Other wallets in India, like FreeCharge and Mobikwik, have developed UPI-powered apps in partnership with banks. But Paytm wants to have its own app, because it will have a licence to run a payments bank, and can give its customers an @paytm virtual address.

To a question from Tech in Asia on how the Paytm app will be different from UPI-powered apps by traditional banks, Vijay Shekhar Sharma pointed immediately to customer experience. “Banks are not great at rolling out UPI,” he said. But for Paytm, “this is the truest opportunity to build something designed for unique Indian needs.

This is an excerpt from Tech in Asia. You can read the full article here