Paytm Q4 FY24: Merchant Loans See 53% Drop; Active PoS Base Shrinks

Fintech major Paytm earlier in the day announced that its revenue from operations has decreased by 2.9% to INR 2,267 Cr in Q4 FY24, compared to INR 2,344 Cr, reported a year ago. The fintech giant’s loss increased by almost  229% to INR 550.5 Cr on an annual basis for FY24.

On the merchant front, the company noted that the active point of sale device base has plummeted by 10 Lakh (1 Mn) despite a marginal increase in the merchant base. The decline has come due to a higher attrition in February and March when Paytm was forced to transition its merchants from its payments bank to other bank partners. 

The merchant attrition was primarily a result of Reserve Bank of India (RBI) barring Paytm Payments Bank from onboarding new users and from offering various services including UPI payments and deposits. 

The RBI action on the Paytm Payments Bank came at the end of January and as a result, there was no new addition to the merchant base in February, Paytm said. 

“Subscription revenue was also impacted due to lower new merchant addition (resulting in lower revenue from device deployment incentive and set-up fees), lower active device merchants and temporary rental waiver for ring fencing certain cohorts of merchants,” the company added in its investor presentation for Q4 FY24. 

Besides this, Paytm said its revenue from payments services increased by 7% YoY to INR 1,568 Cr, but financial services revenue dropped by 36% to INR 304 Cr YoY. 

Paytm noted that RBI’s order impacted active installed rate and per device subscription revenue. In Q4 FY24, the merchant subscription revenue was around INR 90 per device per month, and the company expects the price to hit a floor of INR 80 per device in the first quarter of current fiscal year (FY25), post which it expects the figure to increase towards INR 100 by Q4 FY25. 

Paytm’s merchant subscription stood at INR 1.07 Cr in Q4 FY24, a marginal increase from INR 1.06 Cr it was in the previous quarter. However, this was a 58% increase on a YoY basis. 

The fintech major further added that the marketing services that it collects from merchants, saw a quarterly dip by 23% to INR 395 Cr whereas, it was 1% lower from INR 392 Cr reported in Q4 FY23. 

Merchant Loans Decline

On the merchant loans front, the company said that it resumed merchant lending in March, which was paused in the month of February due to transition of Paytm UPI merchants to other banks. 

In the quarter ending March 31, 2024 Paytm disbursed merchant loans worth INR 1,671 Cr, a 53% drop from INR 3,579 Cr in the previous quarter. This was further 28% lower than INR 2,313 Cr reported in the same quarter in FY23. 

Paytm added that its merchant loans ticket size has increased from INR 1.7 Lakh a year ago to INR 2.05 Lakh now. 

For FY25, Paytm is looking to push for growth in the merchant lending business by offering larger ticket business loans through a distribution only model, where the lender is responsible for collections. “For the loans where we do distribution as well as collections, we are going to remain cautious even on merchant loans, to avoid any asset quality deterioration beyond our partners’ thresholds,” the company noted.