Payment Services: How We Are Driving Leadership in payment monetization with improving profitability

byPreeti VermaLast Updated: August 1, 2023

With 79 lakh merchants paying subscriptions for Paytm payment devices, revenue from our payment business has witnessed a healthy growth of 31% YoY in Q1FY24. Our payment business continues to scale higher driven by an increase in GMV and higher subscription revenue.  

Revenue from the payments business grew 31% year-on-year to ₹1,414 crore in the June quarter while GMV increased 37% year-on-year to ₹4.05 lakh crore. All thanks to increasing digital payments by consumers and along with merchants opting for devices such as Paytm Soundbox and card machines on their counters. As the pioneers of QR and mobile payments in India, we have managed to successfully add 11 lakh new merchants in April to June quarter and 41 lakh over the last one year. 

Moreover, the net payment margin has gone up due to an increase in the net payment processing margin and an increase in merchant subscription revenues. In Q1FY24, the net payment margin went up 69% YoY to ₹648 crore while the net payment processing margin also improved due to an increase in GMV of non-UPI instruments like EMI and cards which have higher processing margins and lower interchange cost for Wallet (post interoperability circular by NPCI) and Postpaid due to better portfolio quality. Despite no UPI incentives received from the government during the June quarter, the payment processing margin was at the high end of the guided 7-9 basis points range, which is encouraging. 

“Payments business has continued to scale up very nicely with improved profitability. Our monthly transacting users, which is the number of customers who transact on the Paytm app, has gone up 23% year-on-year and continues to see an upward trend. Our merchant subscription business, as we have mentioned before, which is a key focus area, has more than doubled year-on-year. In the last quarter, we added 11 lakh merchant subscriptions. So, this is a product and offering that continues to find larger and larger addressable market opportunities,” said President and Group CFO Madhur Deora in a June quarter earnings call. 

In fact, the management believes that the positive movement in payment revenues may also aid us become cash flow positive by the end of the year.  

“We are on our committed guideline of becoming free cash flow positive by the year-end, meaning we could start generating free cash. In fact, some of you may have seen the numbers. So, we have added some cash in our reserves already. We are very sure that based on the market conditions and positive movement in payment revenues and credit opportunity, we should surely be able to deliver it before year-end,” said our Founder and CEO Vijay Shekhar Sharma in an earnings call.  

Further, the payment business may continue to thrive as we remain committed to deepening financial inclusion.

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