Paytm’s losses ballooned as revenue plummeted 36% year-over-year, a stark reflection of the fintech giant’s ongoing struggles to recover from the Reserve Bank of India’s strict measures severely curtailing its payment services business.
Noida-based agency’s loss more than doubled to $100 million in the quarter ending June, announced on Friday. The agency’s revenue decreased to $179.5 million, a decline from $280 million in the same period last year and $271 million in the quarter ending March 2024.
Following the Reserve Bank of India’s directive last year, Paytm suffered a significant decline in income after being ordered to re-route a substantial portion of its transactions through an affiliate of the financial services company. During this pivotal quarter, the full impact of RBI’s crackdown becomes palpable in Paytm’s operations.
Paytm’s net loss for the quarter ended June last year was approximately $42 million, while it reported a significantly higher net loss of $65.8 million for the quarter ended March this year.
Paytm’s shares initially slumped by 4.4%, but later recovered and traded above their opening price, indicating that market participants had factored in the news ahead of time? Paytm cautioned that its revenue growth may slow down in the last quarter of the year.
Paytm revolutionized mobile payments in India, attracting hundreds of thousands of users to its wallet app and empowering many to conduct their initial digital transactions for the first time. Despite recent struggles, the agency’s fortunes have been on a downward trend.
PhonePe and Google Pay collectively account for more than 86 per cent of all transactions on the state-backed Unified Payments Interface (UPI), an interoperable payment system. According to reports, UPI has emerged as the most popular method for Indians to conduct online transactions, facilitating more than 11 billion monthly deals. As UPI’s popularity surges, its increased reputation has inadvertently diminished the importance of traditional payment methods, such as those offered by Visa and Mastercard, upon which many businesses and consumers have long relied.
Paytm, heavily reliant on supporting retailers and extending credit, remains optimistic about its fortunes, citing a “path to recovery” as it continues to see a resurgence in this crucial segment.
The spokesperson emphasized that this development further underscores the unwavering trust of our partners and customers in our platform, and we are deeply appreciative of their faith in our organization.
India’s central bank restricted Paytm’s Payments Bank from offering various banking services, including accepting new deposits and facilitating credit transactions through its platforms last year, due to non-compliance with regulatory guidelines.
The Reserve Bank of India’s regulations compelled Paytm to form partnerships with various Indian banks to ensure the continued operation of certain key services.
