Tag: Paytm

Addressing analysts on Wednesday, Vijay Shekhar Sharma, the founder and CEO of One97 Communications, the parent entity that operates brand Paytm, said that he is confident that the organisation will reach back to key metrics, making a strong recovery.

Sharma further added that the company has started to come back, with the focus now on ‘building large revenues and a profit-centric organisation in the long term”, post the regulators directive on its associate entity.

“The last three months have been quite a roller coaster in the journey of Paytm. We learned a lot of lessons. We learned how to become better and resilient. We also resolved ourselves to be fully compliant according to the regulator’s expectation in letter and in spirit. I’m very happy to see that our results are indicating that,” he said.

As a part of its FY24 financial reporting, the company said that it has already started to make a recovery across key metrics such as payment gross merchandise value (GMV) and additions on subscription merchants starting May. 

“We now have started to come back to those dynamics of businesses and started to build a large revenue and profit centric company in the long term,” said Sharma, adding that ‘the worst is behind the company’.

Paytm, earlier in the day announced its Q4 FY24 and FY24 results showing strong growth momentum across core payments and financial services distribution business with revenue from operations increasing 25% YoY to ₹9,978 Cr in FY24. However, in Q4FY24, the revenue declined marginally by 3% to ₹2,267 crore, impacted by temporary disruptions in business operations.

Commenting on the same, Sharma said, “In this quarter we might have two months of impact on the business, still our annual performance is better than last year. We remain committed to grow sustainably, focus on profits and focus on the core of the business which is payments.”

Moving ahead, the company’s focus is on governance for the next few quarters as it expects to onboard new independent board members in group entities as well as subsidiaries. In continuation to investing in sales teams and marketing, the company will also invest in customer acquisition, to drive market share. 

In addition, insurance and wealth can become positive for the growth of the entity, Sharma said. 

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.