Paytm Looks Beyond UPI for Market Growth

YB WEB DESK. Dated: 2/8/2022 11:19:44 AM

The Indian fintech giant diversified its business by branching out into new revenue models. Payments remain dominant but Paytm considers UPI just one of many channels for providing financial services to consumers and merchants.
Payment Provider Pushing More App Functions
In line with global trends and India’s way to digital market maturity, Paytm confirmed recently it seeks to outgrow any dependence on UPI payment systems. The platform has invested heavily in app architecture and aims to expand the share of its diverse financial services.
Coming off its historic IPO listing in late Fall 2021 – the largest on any Indian stock market –Paytm’s share prices dropped somewhat in the following weeks. Yet it managed to maintain a market cap of $14.5 billion (over Rs 1 lakh crore). Ratings remain stable and brokers expect the company to turn consistent profits by 2026.
Paytm has become synonymous with mobile payments for all kinds of daily spending: from utility bills to personal transfers, from insurance and lending to buying tickets for the government lottery in India. Despite not making any money on UPI payments, the company supports a “zero Merchant Discount Rate” (zero-MDR) policy. It plans to compensate losses through the long-term digital acceptance of mobile financial services by the Union market.
Gradually, the firm started pushing app functions related to wealth management, particularly credit offerings. The approach suits both consumers and merchants and las led to rising revenues from non-UPI-based payments, merchant partnerships and a growing number of financial instruments.
Paytm’s operational revenue grew 64% (year-on-year) in the last quarter of 2021, with non-UPI payments rising 52% in Gross Merchandise Value (GMV) and financial services shooting to a 3-fold growth. In fact, anything the Paytm app offers beyond payments is revenue generating – from organized retail to FASTag toll collection.
Digital Wallets Put Pressure on Offline Retail
Paytm is a prime example of the rapid adoption of financial technology, as revealed by a study on government lottery retail. Personal and commercial account transfers are the norm across Bharat, and digital payment channels are having a decisive impact on the economy. The ease of purchase is a factor in most markets – from home entertainment to wealth management.
In a way, the majority of adult Indians have moved beyond bank cards, as fintech solutions are available to the over 750 million domestic internet users. Estimates place this user base at over 1 billion by 2027, with digital financial services destined to grow and diversify their offer.
This puts a considerable amount of pressure on offline retail, illustrated by the drop in demand for paper-ticket lotteries in comparison to their online counterparts. Consumer awareness for other online alternatives is likely to test the habits of a nation which used to be cash-dominated until only a few years ago.
Smaller companies were quicker to adapt to the mobile boom, with both payments and withdrawals becoming an easy and traceable substitute for doing business. A definitive transition to an online environment enables both public and private entities to control daily operations, rise safety standards and solve payment issues in real time.


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