The Indian Railway Catering and Tourism Corporation (IRCTC) has announced the launch of a new subsidiary company, IRCTC Payments, to expand its fintech footprint. The new entity will focus on the payment aggregator business and offer various payment options to the customers of IRCTC.
What is IRCTC Payments?
IRCTC Payments is a wholly owned subsidiary of IRCTC, which is a public sector undertaking that provides ticketing, catering, and tourism services for the Indian Railways. IRCTC Payments was incorporated on February 10, 2024, with the Registrar of Companies, NCT of Delhi & Haryana, for the purpose of payment aggregator business.
According to the company’s disclosure with the stock exchange, IRCTC Payments will have a paid-up capital of Rs 10 crore and an authorized capital of Rs 25 crore. The company will have four directors, including IRCTC’s managing director and chairman Seema Kumar, and three other officials from IRCTC.
Why did IRCTC launch IRCTC Payments?
IRCTC launched IRCTC Payments to leverage its existing customer base and offer them more convenience and security in making online payments. IRCTC has over 6 crore registered users and handles more than 25 lakh transactions per day on its website and mobile app.
IRCTC already has an in-house payment gateway, called iPay, which was launched in 2020. iPay allows users to book tickets through autopay, debit card, credit card, net banking, UPI, and other modes. iPay has processed more than 15 crore transactions since its launch and has a market share of over 30% in the railway ticketing segment.
However, iPay is not a licensed payment aggregator, which means it cannot directly connect with the banks and card networks. Instead, it has to rely on third-party payment service providers, such as Paytm, PhonePe, and Razorpay, to facilitate the transactions. This adds an extra layer of cost and complexity to the payment process.
By launching IRCTC Payments, IRCTC aims to become a licensed payment aggregator and directly connect with the banks and card networks. This will enable IRCTC to reduce the transaction costs, improve the success rate, and enhance the user experience. IRCTC Payments will also offer value-added services, such as loyalty programs, cashbacks, discounts, and coupons, to attract and retain customers.
How will IRCTC Payments benefit the customers?
IRCTC Payments will benefit the customers by providing them with more choices, convenience, and security in making online payments. Customers will be able to use IRCTC Payments to pay for various services offered by IRCTC, such as railway tickets, air tickets, hotel bookings, tour packages, e-catering, and e-wheelchair.
Customers will also be able to use IRCTC Payments to pay for other services and products offered by partner merchants, such as e-commerce, travel, entertainment, education, and healthcare. IRCTC Payments will act as a one-stop solution for all the payment needs of the customers.
IRCTC Payments will also ensure that the customers’ data and money are safe and secure. IRCTC Payments will comply with the regulatory guidelines issued by the Reserve Bank of India (RBI) for payment aggregators. IRCTC Payments will also adopt the best practices and standards for data protection, fraud prevention, and customer grievance redressal.
What are the challenges and opportunities for IRCTC Payments?
IRCTC Payments will face several challenges and opportunities in the payment aggregator business. The challenges include:
- Obtaining the payment aggregator license from the RBI, which requires meeting various criteria, such as minimum net worth, capital adequacy, governance structure, and technical infrastructure.
- Competing with the established players in the payment aggregator market, such as Paytm, PhonePe, Google Pay, Amazon Pay, and Razorpay, which have a large customer base, strong brand recognition, and diversified offerings.
- Managing the operational risks, such as cyberattacks, system failures, and regulatory changes, that may affect the payment aggregator business.
The opportunities include:
- Leveraging the existing customer base and brand value of IRCTC, which is the largest e-commerce platform in India and a trusted name in the railway sector.
- Expanding the customer base and revenue streams by offering payment aggregator services to other sectors and segments, such as e-commerce, travel, entertainment, education, and healthcare.
- Innovating and differentiating the payment aggregator services by offering value-added features, such as loyalty programs, cashbacks, discounts, and coupons, to attract and retain customers.
IRCTC Payments is a new fintech venture by the railway PSU that aims to provide a seamless and secure payment experience to the customers of IRCTC and its partner merchants. IRCTC Payments will face stiff competition and operational challenges in the payment aggregator market, but it will also have the advantage of a large and loyal customer base and a strong brand value. IRCTC Payments will be a key driver for the growth and diversification of IRCTC in the coming years.
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