MeitY Counts On Paytm To Power Next Wave Of Digital Payments Growth

Recognising the contributions of the Indian startup ecosystem in promoting cashless transactions, the Ministry Of Electronics and Information Technology (MeitY) has asked digital payments giant Paytm to support its target of facilitating 40 Bn digital transactions in FY20.

A media report cited people aware of the mandate to say that Vijay Shekhar Sharma-led Paytm has been given a target of 5 Bn transactions through its payments bank and mobile wallet by MeitY. 40 Bn digital transactions will mean a 33% hike from last year’s target of 30 Bn digital payments.

Initially in the 2017-18 budget, India’s finance minister Arun Jaitley had set the goal of 25 Bn digital transactions in the country. This was followed by the MeitY’s 2018 letter to the banks which had aimed for 30 Bn digital transactions in the country by the end of FY 2019. However, neither of these targets were met.

This year, with government’s reliance on Paytm, it is interesting to note that of 40 Bn transactions, SBI is expected to reap in the highest— 7.7 Bn. This seems suitable as it is the largest public bank of the country. Notably, top private banks of the country—  HDFC Bank and ICICI Bank— are expected to chip in with about 2.5 Bn and 2.8 Bn transactions respectively.

This demographic speaks a lot about the trust Paytm has earned with regards to its capability of leading the digital transactions in India. According to NITI Aayog’s, India’s digital payments industry is estimated to grow to $1 Tn by 2023. Further, the value of digital payments is likely to jump from the current 10% to over 25% by 2023.

In the competitive industry, April 2019 was a tough month for Paytm. It came in third place based on the value of transactions. Google Pay did transactions worth INR 49,700 Cr, PhonePe did a transaction value of INR 42,610 Cr and Paytm registered transactions worth INR 35,500 Cr.

Further, in terms of number of transactions, PhonePe leads with 258 Mn transactions followed by Google Pay and Paytm at 230 Mn to 240 Mn. As these giants level up their game to the next level and earn government’s trust to support its ambitions, the startup ecosystem has made itself proud.