Paytm Payments Bank Loses Ground in FASTag Transactions to Major Banks: Report 

Paytm Payments Bank Loses Ground in FASTag Transactions to Major Banks: Report 

The central bank's action against Paytm Payments Bank ended its FASTag payments business. This, in turn, reduced its market share in the segment from around 16 percent in January to 2 percent in May.

According to data from the National Payments Corporation of India (NPCI), the market share that Paytm Payments Bank lost in FASTag toll transactions due to a regulatory clampdown has now been divided among a few commercial banks. This was first reported by the Economic Times. 

“FASTag is an RFID passive tag used for making toll payments directly from the customer's linked prepaid or savings/current account,” as per the NPCI. 

The Reserve Bank of India's (RBI) action against Paytm Payments Bank ended its FASTag payments business on March 15. This, in turn, reduced its market share in the segment from around 16 percent in January to 2 percent in May. 

Read: Paytm Shares Record 25% Gain in 1 Week: Why Investors Find Vijay Shekhar Sharma's Firm Attractive Again

Even though in the consumer-facing payment business, banks are losing shares to fintech, in the toll payments space, they are gaining them. As per the report, around 25 to 30 percent of the new tag issuance is happening through banks such as HDFC Bank. It is followed by IDFC, ICICI, and Axis Bank.

While speaking about transactions in FASTag payments, IDFC First Bank reportedly holds a 30 percent market share in FASTag payments. It is followed by ICICI Bank with a 26 percent market share, Axis Bank with an 18 percent market share, and HDFC Bank with a 10 percent market share. 

With the shutdown of Paytm Payments Bank, these banks have also gained three to five percentage points in market share between January and May. Interestingly, the market share of Airtel Payments Bank rose from 4.7 percent in January to 5.5 percent in May. 

While UPI transactions have grown exponentially, there has been a stagnancy when it comes to FASTag market share, as per data from the NPCI. There were 300 to 350 million transactions per month, as per data from the NPCI. One reason for the same, as per the report, is that not all private vehicles cross national highways on a daily basis. Similarly, there is a limited movement of vehicles on national highways. 

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