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A money market fund would increase Paytm’s portfolio of services to over 250 million users. Source: Shutterstock

India: State Bank accused of monopolizing digital payment space as it disables Paytm top-ups

THE State Bank of India (SBI) is blocking customers from topping-up mobile wallets using their net banking, in a move seen by some as an attempt to monopolize digital payments.

The publicly-owned bank claims the move is due to security issues with these platforms, but sources from within the mobile wallets industry told CNBC-TV18 they thought it could be a move to push customers towards their own mobile wallet State Bank Buddy.

Last week, Inc42 reported on the fact that the ability to top up accounts with industry leader Paytm from net banking had been withdrawn, with the bank actively directing customers towards its own app.

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The company says the move is temporary and customers can still top-up up mobile wallets using debit and credit cards, but the country’s financial regulator The Reserve Bank of India (RBI) has asked SBI for clarification on the issue.

Bipin Preet Singh, founder and CEO of Mobikwik told CNBC-TV18 SBI had blocked net banking payments to the service three to four months ago. FreeCharge, Jio Money and Airtel Money are also affected, according to the report.

The move follows a huge expansion in India’s digital payments sector following the government’s decision to remove high-value currency notes from circulation. According to Mashable, SBI wants to get in on the action, but customers have complained their app is not well-designed.

While SBI may be trying to muscle into Paytm’s territory, the mobile wallet provider may soon be giving them a run for their money on their home turf. The company announced yesterday that it has received final approval from the RBI to launch a digital bank.

It is expecting to roll out its payments bank in the next 30 to 60 days, according to Livemint, and is likely to launch with a pilot in parts of Uttar Pradesh.