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Paytm Strikes Back – Withdraws In App PoS In 1 Day, Pumps In $32 Mn In Payments Bank

Paytm Strikes Back – Withdraws In App PoS In 1 Day, Pumps In $32 Mn In Payments Bank

Ecommerce and payments platform Paytm has withdrawn its in-app POS (point of sale) feature just a day after its launch, citing security concerns raised by payment networks Visa and Mastercard.

In an official blogpost, Paytm stated that it has “decided to add additional certifications and features before making it available to merchants” to make the service more secure and safe. The company added that it “will re-launch this product as soon as we have updated the product”.

Focussing on its mobile-first approach towards digitisation, Paytm went on to add that “the launch was in line with its infrastructure – light, simple, scalable and affordable model, where anyone with a mobile phone should be able to accept payments.” The withdrawal of the app, however, suggests that security flaws may have been present in the current model.

Yesterday, Paytm had updated its app to launch India’s first in-app POS allowing all small and medium merchants to accept all card payments including Rupay, Visa, MasterCard and Maestro. With the Paytm app, merchants could transact up to INR 50,000 monthly by self-declaring themselves as businessmen.

Soon after its launch, several payment networks reportedly raised security concerns regarding the safety and security of the POS feature, including the underlying loophole of the potential misuse of a card bearer’s data.

In another development, Paytm’s parent company, One97 Communications Ltd and its founder Vijay Shekhar Sharma have collectively invested $32 Mn (INR 220 Cr) till date in Paytm Payments Bank Ltd, ahead of its launch that has now been pushed towards early 2017, as per a report by Mint.

According to an official statement, Sharma has invested $16 Mn (112 Cr) in the business, while the rest has come from One97. Sharma will hold a 51% stake in the Payment bank, and 49% stake will be held by One97.

Commenting on the deferred launch of the Payments bank, Sharma said in an interview, “There is a long process of getting all approvals and certification in place from the Reserve Bank of India. The process is in its last lap now.”

The company has set a target of 200 Mn accounts, across current accounts, savings accounts, and mobile wallets, within 12 months of the launch. It aims to touch 500 Mn accounts by 2020.

According to Sharma, the government’s demonetisation drive, which has mandated people to look for alternative cashless options for conducting transactions, has created an opportunity to open more payments bank accounts. Moreover, since demonetisation on November 8, 2016, the company’s monthly spend has gone up 3x for the month, according to an official statement.

Earlier this week, Airtel beat Paytm to the launch the pilot of its Payments Bank Limited, Airtel Bank in Rajasthan. The pilot is aimed at testing systems and processes ahead of a full-scale country-wide launch. Customers in towns and villages across Rajasthan will now be able to open bank accounts at Airtel retail outlets, which will also act as Airtel banking points and offer a range of basic, convenient banking services.

The Reserve Bank of India had granted payments bank licenses to several companies, including Airtel and Paytm, earlier this year in April. Besides the two, Vodafone, Reliance Industries, Idea Cellular, Paytm, FINO Paytech, India Post and National Securities Depository Limited have all  received payments banks licenses.

Author

Ambika Chopra

Inc42 Staff

An ace feminist and humanitarian, Ambika identifies herself as a reader, writer and a dreamer. Also a literature buff and development enthusiast. At Inc42 she aims to explore the startup ecosystem with ideas that juxtapose digital culture with social responsibility.

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