Prepaid, Credit Could Add Extra Margin To Payments In India: Vijay Shekhar Sharma

Speaking during a Paytm earnings call for the quarter ended June 30, 2023 (Q1 FY24), cofounder and CEO Vijay Shekhar Sharma noted that prepaid and credit can allow payments in India to have extra margin.

“Prepaid and credit are the flairs that could add extra margin to payments in India,” said Sharma in response to an analyst query during the conference call.

The Paytm CEO also added that prepaid and credit were also adding to Paytm’s revenue.

Sharma’s comments come as Paytm said that loan EMIs and credit card payments have improved its gross merchandise value (GMV), which in turn improved the fintech giant’s net payment processing margin.

“Net Payment Processing Margin has further improved and is now at the top end of

7-9 bps range due to… increase in GMV of non-UPI instruments like EMI and cards,” said Paytm in its earnings statement for the June 2023 quarter.

To be sure, Paytm has been increasingly bullish around lending over the past few quarters. It has followed a two-pronged approach: consumer lending via personal loans and merchant lending.

For now, the fintech giant has tied up with several banks to underwrite and offer the loans, but it has been working on obtaining a banking licence for its payments arm, Paytm Payments Bank.

However, there are no clear timelines as to when the licence would arrive. Though if the words of Paytm’s payments and lending head Bhavesh Gupta are anything to go by, the process is going smoothly for the listed fintech.

Analysts are also interested in Paytm’s lending vertical, given the number of questions put to Vijay Shekhar Sharma and the team around lending.

According to its latest performance update, Paytm saw its loan disbursals surge 167% year-on-year (YoY) to INR 14,845 Cr during the April-June 2023 quarter, while the number of loans also increased 51% YoY to 12.8 Mn.

However, due to increased demand in May and issues at its lending partners, the fintech’s lending activity faltered in June.

As of June 30, The Vijay Shekhar Sharma-led fintech giant has issued 24.7 Mn loans worth INR 27,399 Cr in 2023.

Paytm Cuts Losses YoY, Increases EBITDA Before ESOPs

The fintech major nearly halved its losses YoY to INR 358.4 Cr in Q1 FY24. However, on a quarter-on-quarter basis, consolidated losses more than doubled by 113% from 167.5 Cr in the preceding quarter.

The losses were offset by rising revenues, which zoomed 39% YoY to INR 2,342 Cr in Q1 FY24, compared to INR 1,680 Cr in Q1 FY23.

EBITDA before ESOP costs stood at INR 84 Cr during the quarter under review versus an EBITDA loss of INR 275 Cr in Q1 FY23.