India’s payment revolution is showing no signs of slowing down, as both merchants and consumers continue to embrace digital payment technology with enthusiasm. Paytm Soundbox, our pioneering IoT device launched to address a specific need amongst our merchants, has witnessed tremendous adoption since its launch. This battery-operated device offers a range of features that have made it the most preferred choice for merchants in the country to accept payments, including Paytm’s All-In-One QR, 4G support, cashback, and seven-day battery life.
We have further strengthened our leadership in offline payments with a cumulative deployment of 5.8 million devices including PoS and Soundbox, according to our Operating Performance Update for Q3FY23. This represents an increase of 1 million merchants paying subscriptions for payment devices in the quarter and marks the second consecutive quarter in which we have achieved device deployment of 1 million. In a year, we have gone from 2 million devices to 5.8 million devices.
Our focus on subscription services continues to expand as we focus on creating additional payment monetization beyond MDR. With our subscription-as-a-service model, the strong adoption of devices drives higher payment volumes and subscription revenues, while increasing the funnel for our high-margin merchant loan distribution business. The robust adoption of subscription products by merchants is making payments increasingly monetizable and profitable for us.
Paytm Soundbox offers merchants instant audio confirmation in any of the 11 supported languages for every payment made through a Paytm QR code. This has helped to build trust between merchants and customers, as merchants can quickly confirm successful payments. It supports multiple payment methods such as Paytm Wallet, Paytm Postpaid, Paytm UPI and other UPI apps, net banking, and cards, therefore providing more flexibility and convenience to our merchants. By leveraging our insights into merchants’ payment flow, we are able to offer them the ability to seamlessly obtain loans from our financial institution partners. This capability makes it more attractive for merchants to use our platform for all their payment and financial services needs.
According to our Q2FY23 earnings presentation, merchants who also have Paytm devices accounted for over 85% of merchant loan disbursals. Our lending partners are able to rely on our distribution and merchant insights, otherwise unavailable to them. Merchants are increasingly willing to pay for technology that enhances the trustworthiness of digital payments. This presents us with a great opportunity to enable financial inclusion for a large number of merchants. This journey means that the relationship we have with our merchants expands over time from QR payments to devices to credit.
The penetration level for merchant loans remains low at just 4.4% of total devices deployed (as per Q2FY23 earnings presentation), suggesting that there is significant headroom for growth in this area. As we continue to add more devices, the total market for merchant loans will continue to expand, providing opportunities for further growth.