Indian regulators have forced the country’s payments giant to pause the onboarding of new customers during an IT audit. This is the second time Paytm has faced such a ban in five years.

Why should we care?
Paytm’s woes are part of a larger regulatory wave facing payments giants across Asia. Much like WeChat Pay’s conflicts with China’s central bank, Paytm’s struggles have complicated the company’s path to a more sustainable regulatory standing. Paytm is eligible to upgrade from its status as a “payments bank” to that of a “small finance bank” in May, which would let it accept deposits of more than INR 200,000 ($2,612.6). The RBI’s onboarding ban suggests it may reject Paytm’s application for such a license. Paytm will have a steep uphill battle to profitability without that added depth; its most recent quarterly net margin was -53.5%. Much like Tencent, Paytm is now facing a stock selloff, having tumbled more than 20% in the last two days of trading. This volatility may further discourage Indian fintechs from entering the public market, making for an intentionally private and under-the-radar fintech landscape in the country. Tensions between India and China complicate Paytm’s financial standing as well; Ant Group and Alibaba own 31% of Paytm. Paytm may be used as a pawn in India’s standoff with its neighbor, affecting investors on both sides of India and China’s disputed border.