Paytm Setback and Its Impact on India FinTech Market: A Mixed Method Study of Digital Consumers and Traders

Abstract

Paytm, a popular FinTech company in India known for its user-friendly interface and all-in-one digital financial services platform, faced regulatory scrutiny from the Reserve Bank of India (RBI) due to management and operational shortcomings that required compliance by February 29, 2024 (later extended to March 15, 2024). The aim of this study is to analyse the impact of RBI regulations on Paytm, the FinTech market and the stakeholders, focusing on digital consumers and traders simultaneously. Empirical data was collected from a pool of 119 respondents (comprising 80 consumers and 39 traders) using a web-based online questionnaire. Demographics like age and occupation, users and non-users of Paytm were used as input variables for the empirical study. The findings indicate that both consumers and traders relied blindly on FinTech and RBI’s impositions on Paytm have taken a toll on the trust and reliance of these digital consumers on FinTech, prompting them to switch to other UPI service providers. This research employs a mixed-method approach, offering recommendations for FinTech firms to enhance the trust of their stakeholders and analysing the users’ outlook towards financial technology and FinTech companies. The study provides empirical evidence that supports the impact of the risks in the FinTech industry on its stakeholders and provides valuable inputs for policymakers and stakeholders in the Indian FinTech market. The findings highlight the need for FinTech companies to align their operations with regulatory standards and maintain a strong focus on customer protection and data security.

Keywords: Paytm, FinTech, RBI Regulations, Digital Transactions, Digital Consumers

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