One97 Communications, which owns brand Paytm, is bullish on Unified Payments Interface (UPI) alongside card processing and EMI payments to drive its payment services business. 

These business lines are expected to play a key role in Paytm’s strong revival and maintain its position as a payments leader in the country. 

 The company has highlighted that UPI, which previously contributed 70 percent of the total Gross Merchandise Value (GMV), now accounts for nearly 80-85 percent, emphasising its pivotal role in the business model.

 During an earnings call following the release of Q4FY24 and FY24 results, Paytm also emphasised on recovery of its merchant Gross Merchandise Value (GMV). In FY24, Paytm’s GMV surged 39 percent year-on-year to ₹18.3 lakh crore. 

 Paytm’s revenue stream includes UPI incentives and higher payment processing margins from RuPay credit card transactions, overdrafts, and EMI aggregations.

 While UPI merchant payments do not generate Merchant Discount Rate (MDR), Paytm benefits from subvention payments from the government. In Q4FY24, Paytm received UPI incentives of ₹288 crore, versus ₹182 crore received in Q4FY23. Paytm’s revenue from payment services increased by 26 percent to ₹6,235 crore. Additionally, the net payment margin rose by 50 percent to ₹2,955 crore.

 During its financial results, the company also stated that it is seeing a positive growth trend in Payment GMV since the month of April (excluding certain products). 

 Paytm Soundboxes now brings the power of Rupay Credit Card on UPI, offering zero Merchant Discount Rate (MDR) to small merchants for transactions under ₹2,000. This service allows small businesses to save on transaction fees, expanding their profitability and making it easier to adopt digital payments.

Merchant GMV Recovery

Paytm’s GMV has shown year-on-year growth. It aims to reactivate inactive merchants and add new ones to its platform. As of March 2024, merchant subscriptions came at 1.07 crore, increasing 39 lakh on the year. “We expect net additions to recover to past trend lines by Q3 FY 2025,” the company said. 

Paytm continues to address its merchants’ needs through innovative product launches, which are backed by a large distribution and service network. It recently launched two more “Made in India” Soundbox which are customized to the needs of its merchants, with louder speakers and longer battery life.

Paytm’s strategy includes expanding its device subscriptions. The subscription per device metric, which had decreased, is anticipated to rise again. 

The company is also launching new ad campaigns to boost user engagement and highlight UPI, Soundbox, Paytm UPI Lite wallet, and other payment instruments, reflecting Paytm’s recovery focus. 

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