Paytm Betting On Paytm Money, Merchants & AI To Turn Operationally Profitable In A Year

Fintech major Paytm is aiming to generate an operating profit in under a year by bolstering its online wealth management services and onboarding more merchants on its network, coupled with cost savings from AI automation.

Paytm founder and CEO Vijay Shekhar Sharma made the projection in an interview with Bloomberg, highlighting the company’s plans to hire over 50,000 salespeople to onboard more merchants and revamp its online wealth management services.

“We have learned and we will amplify our ability to serve India, its small merchants and businesses,” Sharma was quoted as saying. “We should be crossing about 50 Mn merchant-base signed up on the Paytm platform in the year.”

Sharma’s interaction with the publication came days after Paytm faced a major setback in its growth trajectory due to the Reserve Bank of India (RBI) tightening regulations around unsecured loans. 

Earlier this month, Paytm said that it would scale down its small-ticket loans of less than INR 50K, which predominantly comprise its postpaid loan business. However, to compensate for this major change, the company said it would increase its focus on the merchant and personal loan business.

Multiple brokerages cut their estimates on Paytm’s various metrics such as revenue and EBITDA in the medium to long term following the changes in its loan disbursal business.

Besides, Paytm’s share price also took a hit, falling to more than a seven-month low. While the shares were trading over 80% year to date till October, they nosedived due to the company’s decision to scale down postpaid loans. Shares of Paytm are currently trading a little over 15% higher.

Besides the loan disbursement business, which comprises a relatively smaller part of the company’s total revenue, Paytm also has a payments business. It had around 38 Mn merchants as of September, of which nearly 10 Mn paid for offerings such as QR codes, Paytm soundboxes, and card machines.

Paytm also operates wealth management platform Paytm Money. Speaking to Bloomberg, the Paytm boss said that the company now wants to double down on this business, layering it with AI, as India’s middle class is increasingly going online to invest in the capital markets.

Meanwhile, by using automation, Paytm also plans to bring down its employee costs.

“We will be able to save the targeted 10% to 15% that we had planned in employee costs, all because AI has actually delivered more than what we expected it to,” Sharma said. 

The statements also come at a time Paytm is seeing a rise in competition. Most recently, Jio Financial Services’ marked its full-fledged foray into the fintech space, while PhonePe is also looking to diversify its offerings and launched stock broking platform Share.Market earlier this year.