Adani may not buy Paytm, enter UPI market nevertheless

Early in the morning of 29 May, Adani Group Chairman Gautam Adani was reported to be keen on a stake in One 97 Communications which owns Paytm. Both companies rubbished the reports later on. But that’s not the point.

Suppose India’s richest man enters the Unified Payments Interface (or UPI) market. In that case, it will compete with companies like Google Pay, Walmart-owned PhonePe, Mukesh Ambani’s Jio Financial and One 97 Communications’ Paytm. That is the point.

If the authority agrees, the prospective UPI service will be offered via Adani One. It’s the company’s consumer app.

Why would Adani be interested in UPI? 

Because

1. This market is huge and is growing exponentially.
2. Since UPI is used everywhere in India now, Adani will penetrate every financial segment of the national economy.
3. He wants to compete with Ambani.

In the fiscal year 2023-24, India’s UPI market grew 56% in volume and 44% in value compared to the previous year. In FY24, UPI transactions reached 131 billion, the first time they surpassed 100 billion in a financial year. The value of UPI-based digital payments in FY23 was 139 trillion rupees. This makes India the third-largest fintech economy in the world. Adani wants a big share of the pie.

Using its UPI service, India's largest business group can get shares also in banking, lending, borrowing, wealth management, insurance etc.

The prospective UPI will first target travellers who use Adani’s airports.

As for the rumour we began with, Paytm had not been in quite good shape since the Reserve Bank of India (RBI) banned Paytm Payments Bank. Aditya Birla Finance, Piramal Finance and Clix Capital pulled the plug on their partnerships with Paytm following the RBI action. Was the rumour of Adani buying Paytm, therefore, a bid to shore up Paytm’s stocks?