PhonePe’s merchant app MAUs on rise as Paytm falls behind

Digital payments platform PhonePe has managed to eclipse its arch rival Paytm by a decent margin in terms of monthly active users of its merchant app, according to data sourced from App Annie. The data was recorded between mid January to mid March.

Paytm lost 20% MAU in the last quarter (between January and March), while PhonePe gained 20% during the same period. Roughly, Paytm’s MAUs stood at 9 million in March whereas PhonePe had around 11 million, as per the data.

As of 2023, PhonePe and Paytm had over 37 million registered merchants base each.

The recent actions by the Reserve Bank of India against Paytm appears to be the primary reason behind this as the company saw a sharp fall in active users after January this year. To recall, RBI had imposed restrictions on Paytm due to concerns regarding breach of and compliance with regulatory norms in January.

However, Paytm later received permission from the National Payments Corporation of India (NPCI) to participate in UPI through the Third-Party Application Provider (TPAP) under the multibank model. This move enabled Paytm users and merchants to continue using UPI services, including autopay mandates, without interruption.

A separate report also suggested that RBI’s diktat on Paytm has triggered a major shift in the digital payments landscape for kirana stores. The report citing a survey, conducted by Kirana club, revealed that more than 40% kirana stores have already switched from Paytm to other alternatives such as PhonePe, BharatPe and GooglePay. As per the survey, the exodus was likely to go up in coming months.

PhonePe and Paytm did not comment on the story.

Besides PhonePe, Khatabook’s merchant app also saw a sharp growth in terms of active users while BharatPe for Merchants remained flat in the past couple of months, as per App Annie data. Interestingly, the active users of Khatabook’s merchant app were inching closer to Paytm as of mid-March.

Among the UPI-based consumer facing payments apps, PhonePe is far ahead of its peers and controls nearly 50% market share followed by Google Pay and Paytm Payments Bank with around 35% and 12% market share respectively.