PhonePe buying ZestMoney is bad news for Paytm

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Editor's note: PhonePe’s imminent purchase of ZestMoney is a big step towards the Walmart-owned firm's ambitions to be a financial super app. A deal hasn’t yet been finalized but media reports from last week suggest that there is an agreement in place between the companies and the acquisition is likely to be made official in the next 2-3 weeks. Successful big-ticket consolidations within India’s fintech sector are rare. The complexities of the businesses, disagreements over valuations between private investors and a wide array of compliances involved mean that high-profile deals in fintech fail more often than not. The collapse of the PayU-BillDesk merger, CRED’s decision to back out of the Smallcase buyout and Paytm’s failure to secure regulatory approval to complete the Raheja QBE acquisition are some recent examples that come to mind.  Even PhonePe’s deal to acquire IndusOS for $60 million in 2021 barely scraped through. Nonetheless, let’s for a moment imagine that all goes well and PhonePe’s deal to acquire ZestMoney does indeed come to fruition. In such a case, this acquisition has the potential to be one of the …