paytm crisisPaytm is leaving soon employee benefits due to market regulatory action Its payments bank and mobile wallet have paved the way for other players like Plexi (formerly Sodexo), Zaggle and banks to expand their presence in the sector.
ET quoted a senior fintech executive as saying that large corporations are looking at alternative options food benefits Due to upcoming stoppage in services Paytm Payments Bank And its wallet after March 15.
Zaggle, a listed startup, aims to onboard 100-150 new corporate clients by the end of the next financial year. In recent months, the company has launched partnerships with notable entities such as IT company Wipro, staffing solutions provider Quess Corp, private sector lender Axis Bank and others.
Raj Narayanam, Executive Chairman of Zaggle Prepaid Ocean Services“In the food benefits space, we have seen a huge increase in demand and given the competitive landscape, we have continued to grow by adding new customers,” said.

He did not disclose the specific companies that shifted from Paytm to Zaggle after January 31. reserve Bank of India Announced restrictions on Paytm Payments Bank.
Zaggle collaborates with banks like Kotak Mahindra Bank, Yes Bank, ICICI Bank and IndusInd Bank to provide prepaid payment services to its corporate customers. In addition to meal vouchers and employee benefits, Zaggle also offers companies an expense management tool.
During the first nine months of the current financial year, the company reported a net profit of Rs 24.8 crore on operating revenue of Rs 502 crore. Currently, its market capitalization is around Rs 4,200 crore.
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Plexi, the employee benefits business recently spun off from Sodexo, is also aiming to cash in on new opportunities arising from the growth of Paytm Payments Bank, industry insiders told the financial daily.
A Plexi spokesperson said its food wallet business was experiencing substantial year-on-year growth, which was before the Paytm issue. However, he declined to comment on any specific growth in business after January 31.
There was no response to queries sent via email to Paytm.
The employee benefits landscape is changing
Disruption in the employee benefits sector has highlighted the importance of tax-free meal benefits Under the tax rules of India. Many companies offer a part of employees’ salary as tax-free benefits, loading the funds into a prepaid wallet linked to the card for transactions. These cards are restricted for use at merchant outlets selling food and beverages.
Various players have been major players in the sector, including French large companies like Sodexo and Edenred, as well as fintech startups like Zeta. However, recent changes, including Edenred India giving up its license and Zeta selling its food benefits business to Sodexo, have reshaped the competitive landscape.
HDFC Bank offers FoodPlus meal cards, and ICICI Bank offers its meal cards. Sodexo recently spun off its food benefits business as Plexi. In recent years, Paytm has become a major fintech player in the sector.
The fintech executive mentioned earlier said, “Paytm had managed to gain a larger market share in this business with its better wallet offering and nationwide acceptance and was at second position in competition with Sodexo, but now the leader board is facing disruption. Going to do; Zaggle is trying to take over that space.
Paytm Corporations were provided the option to create sub-wallets for various expenses such as food, fuel and similar items. Taking advantage of the app’s popularity and its extensive network of merchants, employees found it convenient to easily access and use funds.
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Employee Benefits Industry: Margins, Market Size, and Compliance
The employee benefits industry presents an attractive opportunity for payments players, although profit margins in this sector are quite low. To make profits in this sector, companies often need support services to supplement revenues. For Paytm, this niche business represents a small part of its broader fintech offerings, aiding its penetration into enterprises. Zaggle provides comprehensive expense management solutions, while Sodexo maintains diverse business interests ranging from facilities management.
According to industry estimates, the current market size of this industry is around Rs 1 lakh crore with disbursements benefiting around 15-18 million consumers. Some large companies make significant disbursements annually.
One of the country’s largest financial services companies distributes around Rs 1,500 crore every year, mainly as food benefits, to its employees, an official was quoted anonymously as saying.
The most important aspect of this business is to ensure proper KYC of the end user, that is the employee, and guarantee that the funds are utilized at the appropriate places.
Zaggle’s Raj Narayanam noted that tracking very small value payments based on merchant codes becomes challenging when using QR code-based payments. However, compliance is better managed through prepaid cards.
A senior HR executive at a large corporation said that going forward, most large companies will opt to tie up with multiple vendors to minimize the risk of disruption.
This person further said that banks are also advocating for honest KYC of the end user of the wallet and a clear understanding of its usage.