Vijay Shekhar Sharma’s loss—20M Paytm Fastags—is his ex-colleague’s gain

**Snigdha Sharma** (0:03)
You must have been hearing about what is happening with Paytm. In case you haven't, I will quickly tell you. The Reserve Bank of India barred Paytm from continuing all its banking services through Paytm Payments Bank after the 29th of February. Paytm Payments Bank is a restricted digital bank that cannot lend, but it can take deposits up to 2 lakh rupees. It has been operational since 2017 and its services include current and saving accounts, fixed deposits with partner banks, balance in wallets, UPI and also Fastag among other services. Now, the RBI has basically said that it cannot take any more deposits or conduct credit transactions. This also means no top-ups on any customer accounts, prepaid instruments, wallets and cards for paying road tolls. In other words, the RBI has essentially killed Paytm Payments Bank. I did tell you all about it earlier in January, so you can actually go and listen to that episode if you want that story in detail. I'll link it to the show notes of this episode. Anyway, the point is that Paytm is in deep trouble. But you know what they say, one man's loss is another man's gain. And that is exactly what is happening to Paytm right now. So when the RBI killed Paytm Payments Bank services, it also meant that Paytm Bank could not accept deposits or top-ups in its customer accounts, including wallets and Fastag. Fastag is India's electronic toll collection system. It's basically a radio frequency identification or RFID technology enabled card that is fixed on a car's windscreen. It helps in making toll payments directly from the customer's bank account or wallet like Paytm Wallet. Now, Paytm happened to account for over a quarter of 82 million Fastags in India. So with this RBI directive, nearly 20 million of these Fastags will be leaving the Paytm ecosystem. And of course, there is somebody who wants to cash in on it. It is a four-year-old car services platform called Park Plus. And here's the twist in the tale. Park Plus was founded by Amit Lakhotia, who was formerly at Paytm and he actually helped the company set up its payments business. The Ken spoke to him and here's what he told us. And I'm quoting, I feel that Paytm is very emotional for me.
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Welcome to Daybreak, a business podcast from The Ken. I'm your host Snigdha Sharma and I don't chase the news cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Today is Friday, the 8th of March.
To begin with, let us quickly understand what Fastag is. The idea is to avoid traffic jams and long queues at tollbooths on national highways. So the government came up with Fastag. It is essentially a cashless transaction through which the whole toll tax amount is collected.
Now, Fastag is operated by 35 different banks, which are governed by the National Payments Corporation of India, NPCI, and the National Highways Authority of India. And Paytm Payments Bank was one of them. So what happened when the government asked Paytm Payments Bank to shut down? For those who had been using Paytm's Fastag, it meant that they could not port their Fastags to another bank, which in turn means that they only have one option, which is deactivate Paytm Bank Fastags and apply for a new one. Deactivating is compulsory because according to the one vehicle, one Fastag policy, no vehicle can have two toll passes registrations. And for distributors, it would mean an opportunity to make an annual revenue of more than 2000 crore rupees by taking on Paytm's existing Fastag users to register with them. And of course, that is what got Park Plus's Lakhotia interested.
Stay tuned.
So the thing with Park Plus is that it can only distribute Fastags and not issue them. Paytm could do it with its banking arm, and Paytm would then distribute them. So basically, Fastag distributors find customers for banks in return for a one-time commission on the registration fee.
In Park Plus' case, it would also earn a recurring commission every time the car crossed a toll. Now, a huge part of Park Plus' revenue already comes from Fastag commissions. For the year that ended in March 2023, Park Plus earned a revenue of approximately 100 crore rupees and nearly half of it came from Fastag commissions. The company currently distributes nearly 2,50,000 Fastags in a month. So what's going in its favor is the scale that it provides, which is why it wants to tap into the 20 million Paytm Fastag users who are up for grabs right now. Currently, it has about 6 million users and the plan is to double them at least. So how is Parc Plus planning to do this? Stay tuned to find out.