Paytm Loss Widens and Revenue Shrinks as it Grapples with Regulatory Clampdown
Revenue falls 36% and losses double as regulatory actions take a toll on Paytm’s payments bank operations.
19 July 2024
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Savleen Kaur
Paytm's revenue fell by 36%, and its losses more than doubled to $100 million in the first quarter.
The RBI's restrictions on Paytm Payments Bank have severely impacted the company’s operations, leading to significant financial challenges.
Despite setbacks, Paytm has formed partnerships with other banks and reports recovery in its merchant services business, indicating ongoing confidence from its stakeholders.
Indian fintech giant Paytm continues to face significant challenges. The company reported a 36% decline in revenue and a doubling of its losses in the first quarter, as it struggles with the impacts of a regulatory clampdown on its payments bank subsidiary.
Once the darling of India’s startup ecosystem, Paytm’s loss widened to $100 million for the quarter ending in June, while revenue fell to $179.5 million from $280 million a year earlier. This sharp decline highlights the severity of the current crisis.
Last year, Paytm reported a loss of $42 million in the first quarter and $65.8 million in the fourth quarter. The Reserve Bank of India’s (RBI) directive earlier this year to cease most operations at Paytm Payments Bank has significantly impacted the company’s financials.
The RBI barred Paytm Payments Bank from offering many banking services, including accepting fresh deposits and processing credit transactions, citing “persistent non-compliance” with regulations. This is the first quarter where the full impact of these restrictions is evident.
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In response, Paytm has formed partnerships with other banks in India to maintain some of its core services. Despite the regulatory setbacks, shares of Paytm initially fell by 4.4% but have since recovered, indicating that investors had already anticipated the impact.
Paytm pioneered mobile payments in India, but its fortunes have waned due to rising competition from Walmart-backed PhonePe and Google Pay. These competitors now process over 86% of all transactions on UPI, India’s most popular online transaction platform. The surge in UPI usage has diminished the relevance of wallet businesses and reduced reliance on card networks like Visa and Mastercard.
Despite the challenges, Paytm remains optimistic about its future. The company reports recovery in its merchant services business, which includes issuing credit to merchants. A spokesperson emphasized the continued confidence of merchant partners and consumers, highlighting the trust and support from stakeholders.
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