Paytm, one of India’s leading fintech giants, has hit the pause button on its buy-now-pay-later (BNPL) service, Postpaid, for new users. This unexpected move comes amidst a cautious atmosphere among lending partners, stemming from the Reserve Bank of India’s recent decision to increase risk weights by 25 percentage points to 125% for unsecured lending.
A noteworthy aspect of Paytm’s Postpaid suspension is the apparent withdrawal of Aditya Birla Capital, a key partner in Paytm’s ventures. This fallout has prompted Paytm to take a proactive step by temporarily suspending new sign-ups for the Postpaid service. Multiple existing users of Paytm Postpaid have also voiced their concerns, stating that they could not access the Paytm Postpaid option while making payments to both online and offline merchants. This situation mirrors a similar move by Aditya Birla Capital with ZestMoney, another BNPL startup. The withdrawal of Aditya Birla Capital contributed to ZestMoney’s recent decision to shut down its operations.
As of now, it remains uncertain whether Paytm is engaging in discussions with its existing non-banking finance company (NBFC) partners to potentially relaunch the service. The company currently collaborates with Hero Fincorp to fuel its personal loans vertical. The temporary halt of the Postpaid service has undeniably impacted a segment of users relying on the service, leaving the platform’s future developments shrouded in uncertainty.
“We would like to put out very clearly here that this is purely speculative in nature. We would request you to not go ahead with this completely speculative news with the potential to create unnecessary worry among our shareholders. As a listed company, any update on any of our business statutorily has to be shared with the exchanges first. We would urge you to wait till our analyst call scheduled at 3.45 pm today,” said a Paytm spokesperson in response to ET‘s queries.
As Paytm grapples with the temporary halt of its Postpaid service, another player in the buy now pay later (BNPL) sector, ZestMoney, bids adieu to India’s fintech landscape. These recent developments raise concerns for existing BNPL startup entrepreneurs, investors, and the overall industry. Regulatory hurdles, partnerships fallout, and the evolving macroeconomic landscape are reshaping the industry’s dynamics. Despite these challenges, the BNPL sector is still expected to grow long term.
The BNPL model is a convenient and attractive option for consumers, and there is a large untapped market in India. Fintech companies that can successfully navigate the regulatory environment and build strong partnerships will likely be successful in the long term. The BNPL sector has the potential to revolutionize the way people pay for goods and services in India.
In the face of uncertainty, industry players must showcase adaptability, innovation, and the ability to form robust partnerships to ensure the success of their BNPL services.
