Paytm, India’s digital payments and financial services platform, is fresh off its historic listing in the stock market and continues to stay focused on monetization and growth opportunities that contribute to its rising revenues. The company has diversified its business to build multi-stack payment architecture with several funnels for revenue, for its two-sided ecosystem of consumers and merchants.
Paytm spokesperson said, “We recognised long ago that digital payments in India is a broad segment with multiple drivers for growth. We are equally focussed on non-UPI growth with a full suite of payment services for both consumers and merchants. Our focus is towards monetization with financial services, especially credit-led offerings.”
While Paytm has become synonymous with digital payments in India, it is now growing its base in financial services. However, Paytm is not focussed on UPI alone. The digital payments and financial services platform saw its revenue from operations grow by 64% Y-o-Y to ₹10.9 billion in Q2 FY 2022, driven by 52% growth in non-UPI payment volumes (GMV) and more than 3 times growth in financial services and other revenue.
UPI doesn’t make any money for businesses yet. Additionally, the NPCI has placed a market cap of 30% on UPI, any player who violates the same will be given warnings and then subsequently, barred from onboarding new users on its platform.
“We believe that zero MDR should remain as it will build digital acceptance. The company has achieved revenue growth despite zero MDR in UPI, and that’s because as a merchant partners with the company he/she also begins to accept the company’s various other payment instruments, which brings revenue,” said the Paytm spokesperson.
The company refers to Non-UPI as its business from merchants, payment services driven by its Paytm Payment Instruments.
Paytm’s moat
Paytm’s business model reminds us all that India’s digital payments market is not restricted to UPI. The company which has always been a differentiator is growing businesses beyond UPI, businesses that bring it revenue.
The company’s strength is that UPI is just one of the use cases it offers consumers for flexibility, but it prefers to have all transactions routed through its own platform by leveraging its own payment instruments built in-house. Even within UPI, Paytm Payments Bank is the highest beneficiary bank and has the lowest technical decline rate because of its robust technology.
A Paytm spokesperson said, “Everything on the Paytm app beyond making payment is revenue generating. In fact, using the wallet for payments in organized retail, or payments using FASTag generates revenue for us.”
India’s digital payments business is growing leaps and bounds, and as the country is expected to have over one billion internet users by 2027, the pace in digital payments is only expected to grow further.
The company, which is now establishing its leadership in financial services, offers users multiple facilities in payments and financial services — from utility bill payments, credit card bill payments, money transfer, recharges, insurance, lending, wealth management and much more.
“It is our sincere belief that we have a better ability to monetize the payments business as Paytm is not dependent on one or few payment methods where monetization potential is low or zero, but has instead created a full-stack ecosystem,” said a Paytm spokesperson.
Paytm leverages the same to cross-sell its products and build a loyal user base. Paytm offers users multiple payment instruments — Paytm Wallet, Paytm UPI, Paytm Postpaid (Buy Now, Pay Later), credit cards/debit cards, Paytm PoS, All-in-One QR code, Soundbox among others. So, it is not dependent on a particular mode of monetization, instead has created several funnels for revenue.
