The Confederation of All India Traders (CAIT) has issued a cautionary advisory to traders and users of Paytm to switch to other payment options for business-related transactions following the RBI curbs on Paytm wallet and bank operations. The RBI has ordered Paytm Payments Bank Ltd (PPBL) to halt most of its business activities due to money laundering concerns and KYC non-compliance. CAIT has warned of potential financial disruption and security risks for Paytm users.
What is the RBI action on Paytm?
The Reserve Bank of India (RBI) has imposed certain restrictions on Paytm Payments Bank Ltd (PPBL), a subsidiary of Paytm that offers banking services such as savings accounts, debit cards, and UPI transactions. According to sources, the RBI has found PPBL to be involved in questionable dealings of hundreds of crores of rupees with its parent company Paytm, which operates the popular e-wallet service. The RBI has also raised concerns over PPBL’s compliance with the Know Your Customer (KYC) norms, which are mandatory for preventing money laundering and fraud.
The RBI has ordered PPBL to stop taking further deposits, conducting credit transactions, and carrying out top-ups on any customer accounts, prepaid instruments, wallets, and cards for paying road tolls after February 29, 2024. This means that customers can access their existing deposits and pay for services with money stored in their wallets till February 29. However, if the RBI does not lift the restrictions, top-up for Paytm wallet will stop and transactions through it will no longer be possible.
How will this affect Paytm users?
Paytm is one of the most widely used digital payment platforms in India, with over 350 million registered users and 20 million merchants. Many small traders, vendors, hawkers, and women rely on Paytm for making and receiving payments. The RBI action on PPBL could disrupt their financial operations and expose them to security risks.
CAIT Secretary General Praveen Khandelwal said that the recent restrictions imposed by RBI on Paytm have raised concerns about the security and continuity of financial services provided by the platform. He emphasised the urgency of this advisory, urging traders and users to act promptly and make informed decisions to mitigate any potential adverse effects on their financial operations.
What are the alternatives to Paytm?
CAIT has advised traders and users to switch from Paytm to other payment options that are more secure and reliable. Some of the alternatives to Paytm are:
- Google Pay: Google Pay is a UPI-based payment app that allows users to send and receive money directly from their bank accounts. Google Pay also offers rewards, cashback, and discounts on various transactions. Google Pay is compatible with most banks and does not charge any fees for using its services.
- PhonePe: PhonePe is another UPI-based payment app that enables users to transfer money, pay bills, recharge mobiles, buy insurance, and shop online. PhonePe also offers rewards, cashback, and coupons on various transactions. PhonePe is compatible with most banks and does not charge any fees for using its services.
- Amazon Pay: Amazon Pay is a digital wallet service that allows users to pay for online shopping, bill payments, recharges, travel bookings, and more. Amazon Pay also offers rewards, cashback, and discounts on various transactions. Amazon Pay is linked to the user’s Amazon account and does not require any KYC verification.
- BHIM: BHIM is a UPI-based payment app developed by the National Payments Corporation of India (NPCI). BHIM allows users to send and receive money directly from their bank accounts using a virtual payment address (VPA) or a mobile number. BHIM also offers rewards, cashback, and discounts on various transactions. BHIM is compatible with most banks and does not charge any fees for using its services.