PhonePe gains big from the Paytm crisis; user base climbs 15-20%

Paytm crisis: The ongoing crisis in Paytm and panic among consumers about the fate of Paytm Payment Bank-issued UPI accounts has turned out beneficial for its rival PhonePe. The Walmart-owned fintech company has seen an at least 15-20% increase in its user base over the last few days.

As per The Economic Times, the user growth through app installs and transactions is likely to pick up more.

“This surge has happened on user numbers, but the company is (also) seeing faster growth on the merchant side. Closer to the February 29 deadline that the Reserve Bank of India has set for Paytm Payments Bank to halt its services, the user growth through app installs and transactions is likely to pick up more,” a person with the knowledge of the matter told The Economic Times.

PhonePe buckles up

The Economic Times also reported that PhonePe has already started preparing its systems on the backend to handle the additional capacity.

“User additions and transaction volumes are only expected to grow further in the coming days and weeks, especially given the lack of clarity around Paytm’s business,” the second person said. “So far, the growth witnessed is mostly organic…but PhonePe is also looking to pull customers as well as merchants in through campaigns,” the person told The Economic Times.

Also Read: Jio Financial Services dismisses talks to acquire Paytm's wallet business

As on December 31, Paytm had around 39.3 million merchants on its platform, which had facilitated 11.85 billion transactions valued at Rs 999 crore during the October-December period.

Meanwhile, PhonePe has an UPI transaction volume of 46% share in the October-December period. The Economic Times report noted that the crisis faced by Paytm may aid in PhonePe's market share to grow as users migrate from Paytm to PhonePe.