studying loopholes of PayTM and making a competition of it

1. Transmoney:
An alternative to PayTM
KARANJIT DEB

2. Market share
of PayTM
Source of Data: NPCI
UPI transaction on July 2022 worth INR 10.63 Lakh Cr ($133.9 Bn)
Share of PayTM on UPI Transaction worth INR 1.11 Lakh Cr (14.9%)

3. Targeting Available Market:
Catered by PayTM as on July, 2022
 Transactions worth INR 1.11 Lakh Cr.
 Share of transaction: ≈ 90 Cr.
Opportunity of ‘Transmoney’ to cater:
UPI total transaction worth INR 10.63
Lakh Cr ($133.9 Bn)
 Total No. of Transaction ≈ 605.83 Cr.
Targeting UPI transaction and small
merchants will lead to customer
acquisition.

4. Loopholes of PayTM:
 Data Privacy concerns: Sharing data with Chinese investors and servers
 Applicable charges on Wallet based transactions
 Diversification from the core operation of the Payment App
 Poor Customer Service
Higher TDR rates for payment gateways leading to merchant discontinuation
 Separation of PayTM business leading to confusion among merchants
 Unrealistic valuations at the time of IPO
Suspension on Payments Bank
 Absence of license to enter the lending business.

5. Data Privacy concerns:
Where is the loophole of PayTm over Data Privacy
RBI has taken issue with Paytm's protocols
relating to KYC, data privacy, data storage, and
outsourcing of data to its Chinese Investors
(Alibaba) and Chinese servers.
The Reserve Bank of India (RBI) on 11 March
barred Paytm Payments Bank from taking on new
customers.
How Transmoney will maintain Data Privacy:
Transmoney, as an Indian FinTech Company,
will store data at Indian servers and will make
sure the privacy of the customers is not
violated.

6. Applicable charges on Wallet based transactions:
What charges are applicable in PayTm
PayTM charges certain amount to the customers
for transforming money from the wallet to bank
A/c .
How Transmoney will maintain Data Privacy:
Transmoney, will reduce those charges for
acquiring more customer base.

7. Diversification from the core operation of the Payment App :
Where PayTM diversified from its core operation?
the company dived into consumer lending, credit
cards, wealth management, insurance
distribution, movie ticketing, fantasy sports, and e-
commerce.
 So many options in the app reduce the user
experience.
Sadly, none of the business divisions exhibit
signs of strong financials.
How Transmoney will work:
Transmoney will focus on the core operation
of a payment app; payment, paying bills etc.
Transmoney will make the User interface
simple for ease of payment.
Transmoney will give more focus on Profit
making segments.

8. Poor Customer Service :
The problem of PayTM in customer support:
Several customer service concerns
Lack of a helpline number
Dependence on Mail based support, which is also
irresponsive
How Transmoney will work:
Transmoney will establish a strong customer
service network for customer satisfaction
Transmoney will focus on verbal customer
support assistance

9. Higher TDR rates for payment gateways:
Higher charges of TDR rates in PayTM payment gate:
Higher TDR rates for payment gateways leading to
merchant discontinuation
Gateway payment is directly charged to customers,
so it is creating a bad impression on customers
How Transmoney will work:
Transmoney will charge minimum charges on
gateway payments so that customer acquisition
can be done.

10. Unrealistic valuations at the time of IPO:
What gone wrong with PayTM IPO:
PayTM has seen India’s largest IPO in history
opened with 27% crash on the first day of
trading.
 Reason behind Paytm’s fallback in the stock
market was its excessively overpriced listing.
How Transmoney will work:
Transmoney, at first work with investor’s funds
to increase the valuation. Then after becoming
profit earning business, it will think about listing
for IPO at right valuation.

11. Sanctions on Payment Bank:
What gone wrong with PayTM Payment Bank:
PayTM Payment bank has been penalized by the RBI
for violating its guideline and restricted for acquiring
new customers.
Payment Bank was one of the most profit making
services of PayTM
How Transmoney Payment Bank will work:
Transmoney will form Payment Bank and will
work as per every norms of the RBI guideline.
Transmoney Payment bank will generate profit
which will compensate the customer
acquisition cost.

12. Absence of license to enter the lending business:
Status of PayTM:
Lending divisions are the most profitable source
of revenue for any fintech
Estimated total market growth potential for
India’s digital lending sector between 2021-2023
is approximately USD 350 billion.
Paytm, however, lacks the license to enter this
segment of the fintech market.
Transmoney’s vision on Lending business:
Transmoney will aim to enter in the lending or
micro-finance business which has the potential
to make the business profitable.
Main focus of Transmoney will be Pay Later
loans, or P2P Micro financing
Transmoney will work with Bank- Fintech
partnership model.

13. Revenue Model and Financial Details of Transmoney:
Transmoney will generate investors’ funds initially to run the business.
Transmoney will allocate these funds for technological advancement and customer acquisition by
providing attractive offers and low-cost transactions
Transmoney will focus on Payments Bank and Lending business for revenue generation.

14. Key points of Transmoney:
Transmoney, as an Indian Company, will store data at Indian servers, not violating data privacy
Transmoney will reduce payment charges for acquiring a more customer base.
Transmoney will focus on the core operation of a payment app; payment, paying bills, etc.
Transmoney will establish a strong customer service network for customer satisfaction
Transmoney will charge minimum charges on gateway payments for customer acquisition.
Transmoney will form Payment Bank and will work as per every norm of the RBI guideline.
Transmoney will enter the lending or micro-finance business which has the potential to make the
business profitable.