“I believe that UPI has started going towards monetisation…different payment instruments will come on UPI.
(The prepaid wallet instrument) has an interesting MDR (merchant discount rate) structure… If our Paytm wallet is being used on somebody else’s QR, the merchant-side QR will have to pay us,” Sharma told analysts, a day after the company declared its March quarter numbers.
“QR payments from bank accounts are free, and which we believe in the long term will remain free, and other payments sources like wallets, which are getting visibility benefiting from interoperability, will also generate revenue for us,” he said.
In March, the National Payments Corporation of India (NPCI), which operates the UPI railroad, had set the interchange fee at 1.1% for merchant transactions initiated using a prepaid payment instrument such as mobile wallets on the UPI network.
Also read | Paytm parent One 97 Communications posts $1 billion in revenue for FY23
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The Reserve Bank of India had announced last year that the UPI can be linked to credit cards issued by banks on the NPCI’s RuPay network.Paytm is planning to soon launch a RuPay credit card in partnership with a bank, Sharma said on Saturday.
The fintech platform’s renewed focus on the UPI assumes significance as it has long resisted pushing the pedal on the payment infrastructure due to the lack of monetisation channels.
This helped its arch-rival PhonePe take pole position in the UPI circuit, commanding as much as 47% market share in March. Paytm was a distant third with a 15% share of the overall UPI volume in the country during the month.
Paytm’s interest in pushing UPI-based channels also became clear after the company launched UPI Lite, one of the first major payments platforms to do so. This incentivises Paytm to push both its UPI and wallet business to gain user revenues on payments.
In a statement announcing its earnings on Friday, Paytm had said that it was preparing to capitalise on the growth of the UPI by offering innovative products. It said it has onboarded 5.5 million customers since the launch of its UPI Lite platform in February.
“Core thing is that different UPI payment modes will have different payment charges… somebody offering services to the merchants could also absorb the merchant’s burden,” said Sharma.
Also read | UPI merchant payments to reach $1 trillion by FY26: Report
“Let me not say whether the merchant will be charged or not, let me say that issuers will fetch charges.”
In 2022-23, Paytm’s parent company One 97 Communications Ltd received Rs 182 crore in UPI incentives from the government.
The company’s net loss for the March quarter narrowed to Rs 167.5 crore from Rs 762.5 crore a year earlier, and Rs 392.1 crore in the previous three-month period.
Quarterly revenue from operations grew 13% sequentially and nearly 51% from a year earlier to Rs 2,334.5 crore. In the core payments services, revenue increased 41% on-year to Rs 1,467 crore.
On Saturday, Sharma also told analysts that Paytm is now not only focused on increasing its revenue but also on improving its earnings before interest, taxes, depreciation and amortisation (EBITDA) before employee stock option (ESOP) costs metric.
“In two years, when we’ve grown our revenues by 2.9x, our margins have also improved by 57%. So, we are very hopeful that we will continue to grow our EBITDA,” he said.
The company reported positive EBITDA before ESOPs cost in the quarter ended December 2022 for the first time.
For the March quarter, EBITDA before ESOPs cost was Rs 234 crore, an increase of Rs 602 crore year-on-year.
“Happy to announce our second consecutive quarter of operating profit. As we have shared earlier, we are aiming for free cash flow next,” Sharma said during the call.
For the year ended March 31, the Noida-based company reported a loss of Rs 1,776.5 crore on total revenue of Rs 8,400 crore (about $1.03 billion).
While the loss narrowed 26% from a year earlier, revenue increased almost 60%. Revenue from operations stood at Rs 7,990.3 crore.
On Friday, Paytm’s stock ended trading 2.75% higher than its previous close at Rs 689.45 on the BSE.
The earnings were declared on Friday after market hours.
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