Tag: paytm

Noida-based payments and financial services distribution major, One 97 Communications, announced a significant expansion in its credit distribution business in its Q1 FY25 earnings release. Credit card distribution continues to scale, with 12.8 Lakh activated credit cards as of June 2024, compared to 7.5 Lakh last year. Despite the cautious stance of issuers and slower industry growth, Paytm has added three new partners in the last two quarters, bringing the total to six live partners for credit card distribution.

“Our quarterly performance has been in line with our expectations, demonstrating the resilience and capability of Paytm’s products and services,” said Paytm founder and chief executive, Vijay Shekhar Sharma, addressing analysts on Friday evening. “This is just the beginning of the end of the tough times, and this quarter reflects the full impact of the challenges we faced. As a team, we are committed to navigating through these times with a focus on compliance. My team and I are committed to ensuring we return to profitable quarters,” Sharma emphasized.

In the June quarter, Paytm’s operating revenue reached ₹1,502 crore, driven by a focus on merchant additions and cost optimizations.

For One 97, profitability is driven by its ability to sell more financial services to customers. Further, it continues to enable merchants to do more commerce activities which are consolidated under its marketing services.

The fintech giant’s revenue from financial services amounted to ₹280 crore, while revenue from marketing services was ₹321 crore. The company’s contribution profit for the quarter stood at ₹755 crore, with a 50% margin. EBITDA (Earnings before Interest, Tax, Depreciation, and Amortisation) loss for the quarter was ₹792 crore, with a net loss of ₹840 crore. The company maintained a strong control over expenses, with a cash balance of ₹8,108 crore as of June 2024 (excluding ₹449 crore funds from Paytm Money Ltd).

Looking ahead, Paytm expects revenue growth and profitability to improve, driven by growth in operating metrics such as GMV, an expanding merchant base, recovery in the loan distribution business, and continued focus on cost optimization.

The company also reported that new merchant signups are reaching January 2024 levels, with a marginal increase in its merchant subscriber base to 1.09 crore. Daily merchant payment GMV (excluding disrupted products) has shown consistent improvement during the quarter and is nearly back to January 2024 levels. Monthly transacting users (MTUs) have stabilized to approximately 7.8 crore at the end of June, with GMV increasing month-on-month.

Earlier this year, Paytm received approval from the National Payments Corporation of India (NPCI) to participate in UPI as a Third-Party Application Provider (TPAP) under a multi-bank model. Axis Bank, HDFC Bank, State Bank of India, and YES Bank act as PSP (Payment System Provider) banks, ensuring Paytm’s existing users and merchants continue to perform UPI transactions and AutoPay mandates seamlessly and without interruption.

“We are fortunate to have a resilient customer base. Moving forward, we need to focus on cross-selling various financial services to our customers, both consumers and merchants. Our Average Revenue Per User (ARPU) remains stable, and we expect it to increase in the coming quarters,” Sharma added.

Samir Arora, Founder at Helios Capital Management, a leading  investment firm, summarised this sentiment in a conversation with CNBC Awaaz, stating that the company is not how it was portrayed a few months back, after regulatory action.   

Arora said “Paytm is not a fraud company, as initially portrayed. We can only say that KYC was not done; it can’t be considered a scam. Not a single customer has suffered a loss.”

This statement reflects the investor confidence towards Paytm’s operations and representative of its ability to navigate through challenges in the current market landscape.  Paytm has steadily rebuilt trust through transparency and proactive measures. Investors, recognising these efforts, have reaffirmed their confidence in the company’s long-term potential.

Paytm’s leadership has also publicly acknowledged that the company could have done better in terms of its responsibilities and fulfilling the trust of the regulator. This unwavering commitment to improve regulatory compliance continues to be the bedrock to its operations, as it continues to bring back customers on to its platform. 

By establishing a foundation of trust and transparency, the company will poise itself for continued expansion in India’s booming digital payments market.

Additionally, Paytm’s ability to continue diversification into financial services such as insurance and wealth management reaffirms its ability to continue building on its strong foundation of payments services. 

This diversified approach is instilling investor confidence as the Noida-headquartered payments major continues innovating for the digital payments sector.

Investments in AI-driven solutions, and enhanced user experience have set Paytm apart in an increasingly competitive landscape.

One97 Communications Limited (OCL) the parent entity that owns brand Paytm, expects that transitioning its core payment business from Paytm Payments Bank Ltd to other banks will help it de-risk its business model and open up new opportunities for long term monetisation, its founder and CEO Vijay Shekhar Sharma said in the company’s shareholder letter on Wednesday. 

Sharma’s comments come at a time when the company has become a Third-Party Application Provider (TPAP) with National Payments Corporation of India (NPCI) for the Unified Payments Interface (UPI) channel. It has partnered with – Axis Bank, HDFC Bank, State Bank of India (SBI), and Yes Bank and has started transitioning its UPI users to these banks.

“I am happy to share that we have successfully transitioned our core payment business from PPBL to other partner banks. This move de-risks our business model and also opens up new opportunities for long-term monetization, given our platform’s strength around customer and merchant engagement,” Paytm Founder & CEO Vijay Shekhar Sharma said in a letter to shareholders.

The company has also commenced onboarding new merchants, but is still awaiting the approvals for onboarding new customers. The company is in discussions with NPCI for confirmation of signing up new UPI consumers for its TPAP App.

The company has partnered with various banks for UPI customers and merchants, card acquiring and BIN sponsorship for card acceptance offering to merchants, nodal/escrow accounts for merchant fund settlement, FASTag distribution, and BBPS.

In February, the company partnered with Axis Bank for the nodal account and escrow account to continue seamless merchant settlements.

It resumed the merchant loan distribution towards the end-March post transition. Moving forward the company also said that it will focus on a distribution-only disbursement model, owing to a much bigger TAM (total addressable market), wider interest from large banks and non-banks, and easier tech integration and more regulatory clarity. The collections under this model will be managed directly by lending partners.

The distribution only loans have continued to scale well and the company has added more lending partners during the quarter, including pilots with banks.

The company’s operational revenue during the fiscal jumped 25% to ₹9,978 crore while its net loss narrowed to ₹1,423 crore, during the year.

Driven by growth and an improved contribution margin, FY24 also saw the company report  earnings before interest, taxes, depreciation, and amortization (EBITDA) before employee stock ownership plan (ESOP) of ₹559 crore.

Paytm has received Unified Payments Interface (UPI) incentives of ₹288 crore for FY24 (recorded in Q4 FY24), as compared to ₹182 crore in the previous fiscal.

One97 Communications Ltd., saw a marginal 3% decline in operational revenue for the fourth quarter of FY24 at Rs 2,267 crore, despite disruptions in payment and lending business lines after Reserve Bank of India (RBI’s) took regulatory action against its associate entity Paytm Payments Bank Ltd.

The company’s revenue from payment services grew by 26% on the year to ₹6,235 crore in FY24.  While, financial services and others revenue rose 30% YoY to ₹2,004 crore in FY24.

The backing from such a broad spectrum of industry leaders not only reflects the trust and reliance placed in Paytm’s services but also emphasizes the company’s significant contributions to the technological and financial landscape of the country.

Pankaj Vermani, CEO of Clovia, took to X (formerly Twitter) to affirm his company’s long-standing partnership with Paytm, emphasizing the continued trust and reliance on the company’s services.

Pankaj Vermani, CEO of Clovia, voiced his company’s enduring partnership with Paytm on X (formerly Twitter), highlighting their reliance on Paytm’s services. “We have been long-term partners with Paytm using multiple services from wallet payments on our platform to Paytm ads for tactical campaigns. They continue to be our partners of choice, now and in times to come!,” he tweeted. https://twitter.com/pankajvermani/status/1754503198830698979

Deepak Shenoy, Founder and CEO of Capitalmind, criticized the severity of the regulatory actions against Paytm Payments Bank. He contrasted this with the handling of past banking crises, where regulatory bodies facilitated smoother transitions.

“Can’t believe RBI would just go destroy a bank like this. When Yes Bank had much bigger issues they took over and got other banks to take over. To protect the system they ensured a smooth transition in 15 days,” Shenoy said in his tweet. “But now they prefer to let all the bank’s customers, vendors and partners suffer and create a confidence issue unnecessarily, and force the business down…” he continued.

https://twitter.com/deepakshenoy/status/1752739142126174532?s=20

Abhishek Asthana, Co-founder of Hood and Founder of Ginger Monkey, supported Paytm by urging a more balanced approach to regulatory oversight, emphasizing the consequences of such decisions on investor sentiment and the continuity of fintech businesses.

Meanwhile, Ashneer Grover, Founder of BharatPe, highlighted the regulatory environment’s effect on the fintech sector’s growth and called for governmental intervention to foster a regulatory landscape that encourages innovation while protecting consumers.

The collective support from industry leaders for Paytm highlights its indispensable role in India’s digital transformation and underscores the necessity of an enabling regulatory environment that promotes innovation, growth, and financial inclusion. As Paytm continues to advance, bolstered by steadfast support, it reaffirms its status as a pioneering force in India’s fintech scene, ready to navigate challenges and emerge stronger.

The Enforcement Directorate has found no evidence of Foreign Exchange Management Act (FEMA) violations by Paytm Payments Bank Ltd (PPBL), as per reports. This comes amid media speculating about FEMA violations by the company in the past week.