Indian betting payment platforms compared: Paytm vs PhonePe

In India, Paytm and PhonePe are the two leading digital payment platforms, but there are significant differences in their applicability and policies for betting (online gambling) transactions. Here are the key points of comparison:

1. Policy on gaming transactions

• Paytm

  • strictly prohibited: Processing payments for gambling, lotteries or any form of illegal betting platforms is expressly prohibited.
  • Implementation measures: Monitoring transaction patterns through AI, freezing suspicious accounts and reporting them to regulators (e.g. Reserve Bank of India RBI).

• PhonePe

  • It is also prohibited: Comply with RBI's Anti-Gambling Policy and refuse to provide direct payment gateways to gaming platforms.
  • workaround: Some users operate indirectly through third-party intermediaries (e.g., virtual cards or UPI disguised transfers), but at their own risk.

2. Limitations on UPI payments

• Both Paytm and PhonePe rely on the UPI system, and the National Payments Corporation of India (NPCI) requires all UPI members to comply with anti-gambling regulations. Therefore:
  • Direct transfers to betting sites may be intercepted.
  • Some platforms have switched to cryptocurrency or underground money channels to avoid regulation.

3. KYC and account risk

• Paytm's KYC is stricter (Aadhaar/passport verification required) and non-compliant usage can result:
  Permanent ban + legal consequences.
• PhonePe's KYC is relatively lenient, but it still flags high-frequency large transfers.

4. Alternatives

If the goal is to bypass regulation:

• Cryptocurrency: Local exchanges like WazirX support anonymous top-ups.
• Prepaid Cards: MobiKwik's virtual cards were used for casino top-ups (now blocked).
  International options: E-wallets such as Skrill, Neteller, etc. accept INR deposits but with poor exchange rates.

⚠️ Legal Warning

Online gambling is illegal in most Indian states under the Public Gambling Act (1867) and the IT Act amendments. Players may face fines or imprisonment; payers are required to co-operate with law enforcement investigations.

Legal entertainment alternatives are recommended (e.g. the fantasy sports game Dream11 has been recognised by the Supreme Court).

5. Transaction processing speed and success rate

• Paytm

  • Instant Payment (UPI): Ordinary transfers are usually completed within seconds, but those involving high-risk merchants (e.g. gaming-related) may be delayed or rejected.
  • High failure rate: The system automatically detects gambling keywords (e.g. "betting", "casino"), which can lead to payment failure or account restriction.

• PhonePe

  • Slightly higher flexibility: Some users reported that small betting transactions were occasionally successful via UPI, especially when using the blurring of remarks for person-to-person (P2P) transfers.
  • Risk of freezing of funds: If NPCI flags a suspicious transaction, funds may be temporarily frozen for 3-7 days for investigation.

6. Fees and limits

⚠️ Note: Attempting to circumvent the limit by repeatedly splitting trades triggers the risk control system.

7. Refunds and dispute resolution

• Paytm prefers to protect consumers:
  Refunds can be claimed if mistakenly paid to a gambling site (proof of fraud is required), but the success rate is low.
• PhonePe usually requires that the recipient be contacted directly for negotiation:
  Gambling platforms rarely cooperate with refunds.

8. Anonymity & Privacy

Though both are tied to mobile number and Aadhaar:

• PhonePe allows the use of virtual numbers for registration (e.g. DoT's temporary numbers).
• Paytm mandatory face recognition verification for large transactions.
  The most insidious way remains cryptocurrency or cash payment intermediaries.

🔍 Reality Case

2023 RBI raid in progress: