From UPI innovations to digital credit potential – these are the growth drivers in Paytm’s business

Paytm has been witnessing a sustained growth in revenues, which reached ₹2,062 crores in the Dec-23 quarter, representing a 2.5x growth from ₹815 crores in Mar-21. The company’s strong growth momentum continued during the third quarter of FY23 due to an increase in merchant subscription revenues, growth in loan distribution, and momentum in the commerce business.

In a letter to shareholders, Paytm’s Founder & CEO, Vijay Shekhar Sharma said Paytm achieved the milestone of EBITDA before ESOP cost profitability in Q3 without losing sight of growth opportunities and keeping all compliances as well as risk factors under strict watch. “I believe the opportunity in our country for newer payment and credit disbursement solutions is huge, which gives us quality revenue and attractive profit pools to address,” Sharma wrote. Paytm outlined the various growth drivers for our businesses in the earnings presentation.

India is witnessing a revolution in the field of digital payments but Paytm believes these are still in the early days with massive growth potential. Growth in Unified Payments Interface (UPI), cards, and EMI-led payments is yet to reach the masses. The National Payments Corporation of India (NPCI) has been innovating with UPI to increase the adoption of digital payments.

Superior user experience, interoperability and security have made Paytm UPI the most preferred payment option for Indians. Paytm has launched UPI LITE which allows instant, multiple small-value UPI payments having a value of less than or equal to ₹200. UPI LITE will further enhance user experience and unclutter their bank statements.

Paytm has introduced RuPay Credit Card on UPI, enhancing the payment experience for both consumers and merchants. Customers will benefit from the ease and the increased opportunity to use their credit cards and merchants will benefit from the increase in consumption by being part of the credit ecosystem with the acceptance of credit cards using assets like QR codes.

In the near term, Paytm believes that India could have the potential of 10 crore merchant entities and more than 50 crore payment customers. Subscriptions for payment and other services will be a large market.

On the lending side, Paytm feels there is a long way to go, and is working on integrating with large NBFCs and banks to leverage the full potential of small digital credit on the Paytm platform. In Q3 FY23, the value of loans disbursed by Paytm’s financial institution partners through Paytm’s platform grew to ₹9,958 crores, a growth of 357% YoY and 36% QoQ.

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