 "Paytm Payments Bank saga: FASTag makers gear up as demand from FIs rise")
FASTag manufacturers are busy ramping up their manufacturing capacity as financial institutions (FIs) scale up orders in the backdrop of the Reserve Bank of India (RBI) placing restrictions on Paytm Payments Bank.
National Payments Corporation of India (NPCI) has a list of 20 tag suppliers and manufacturers for the National Electronic Toll Collection (NETC) project, according to the organisation’s website.
Business Standard spoke to four of these players who have been approached by several banks to ramp up production.
Some certified vendors told Business Standard that FIs such as IDFC Bank, Axis Bank, Kotak Mahindra Bank and Airtel Payments Bank, among others, are placing new orders for the tags. This comes as users will be unable to top-up these labels, which are with Paytm Payments Bank after March 15.
According to industry sources, Airtel Payments Bank has placed 5x-7x more orders for FASTag's compared to normal orders.
“Banking institutions are gearing up. They are asking us for more and more FASTags since there will be a need to re-tag these vehicles.
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Assuming there are over 10 million FasTags issued by Paytm Payments Bank, those many vehicles may need to be tagged again from players such as HDFC Bank, ICICI Bank, IDFC Bank, Airtel Payments Bank and others,” said a FASTag manufacturer on condition of anonymity.
“After January, major banks such as IDFC, Axis, Kotak Mahindra, among others have also placed their orders,” a FASTag manufacturer said.
Meanwhile, another vendor said that Paytm had stopped accepting deliveries of already manufactured FASTags. This is after the regulator published a directive shutting most of the payment bank’s operations last month.
“Active orders from Paytm have reduced since then. Paytm is also not taking delivery of the FASTags that are manufactured since the RBI order came in. We are in a dire situation since the company has given us orders and we have produced those orders. We could be looking at substantial losses if Paytm does not pay us,” the vendor added.
The person has learnt that the company had cancelled all its existing purchase orders for FASTags after January 31. Paytm did not respond to queries sent by Business Standard.
“We have been working with Paytm since the past few years and never had a payment issue with them earlier. They have been regular. Since the RBI has come out with the notification, the company is saying they no longer need the FASTags. The regulator has taken action against Paytm Payments Bank, and not us. Why should we bear the losses?” the person asked.
The company has issued more than 8 million FASTags to date, according to the payments bank’s website.
Manufacturers are confident to meet the rising demand for FASTags by different players.
“We currently have the capacity to manufacture 5-6 lakh labels every month. Moreover, a huge number of tag orders are usually placed with different vendors so that supply is not an issue,” one of the manufacturers quoted above said.
Another vendor said that Radio-Frequency Identification chips on FASTags are usually imported from Taiwan, European Union (EU) or the US. The vendor said his unit can expand its manufacturing capacity by another 20 per cent.
“We can manufacture close to 700,000-1 million FASTags every month. This can rise by another 20 per cent if the demand increases. The entire process to replace all FASTags issued by Paytm Payments Bank may take 1.5-3 months,” the person added.
Filling the gap
>Manufacturers speeding up capacity as financial institutions scale up orders
>Certified vendors said institutions such as IDFC Bank, Axis Bank, Kotak Mahindra Bank, and Airtel Payments Bank among others are placing new orders for the tags
>Sources say Airtel Payments Bank has placed 5x to 7x more orders for Fastag’s than they would place in a normal order