NPCI's interoperability guidelines to pave way for additional revenues for Paytm Payments Bank: Analysts

Analysts including Morgan Stanley and Citi said that the NPCI's latest guidelines on interoperability significantly improve the salience of wallets and open avenues for additional revenue for Paytm Bank.

The National Payments Corporation of India (NPCI) announced Wallet interoperability guidelines on March 24.

The company Monday announced that its full KYC wallet customers will be able to make payments on every UPI QR code and online merchant where UPI payments are accepted.

Morgan Stanley in a research note said that Paytm Payments Bank could soon gain additional revenues with NPCI’s interoperability guidelines for Paytm Wallet with UPI. It has retained its 'equal weight' rating for Paytm with a target price of ₹695.

"If well adopted by Paytm wallet users/merchants, the benefit could be meaningful, as Paytm Payments Bank is the largest issuer of KYC wallets with over 100mn users," Morgan Stanley said in a report. The brokerage firm also said that the cost of wallet loading service charges that Paytm Payments Bank would have to pay to the remitter bank would be 15 bps (for transactions above ₹2,000 that are done via UPI), as opposed to nil now.

Citi said that interoperability of Paytm wallets with UPI significantly improves salience of wallets. The brokerage has maintained a 'buy' rating with price target unchanged at ₹1,061 per share.

In accordance with the latest National Payments Corporation of India’s circular, from now on, the Bank will earn 1.1% interchange revenue when Paytm Wallet customers make payment on merchants acquired by other payment aggregators or banks. The Bank will pay 15 bps of charges for adding more than ₹2,000 using UPI, and in turn will also earn 15 bps when any other wallets use the bank to add more than ₹2,000 using UPI.