Paytm Targets To Add 10  Million Merchants This Year
Signage for digital-payments provider Paytm, operated by One97 Communications Ltd., hangs at a fruit juice shop in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Paytm Targets To Add 10 Million Merchants This Year

Paytm launched an all-in-one quick response code as India’s largest digital payments services provider looks to expand its merchant client base by 10 million this year.

Its ‘Paytm for Business’ mobile application uses QR codes to accept payments from multiple platforms.

“Paytm was a pioneer of QR-code payments and today there are so many QR codes on the counters of businesses. But most of these are for Unified Payments Interface transactions and one of the biggest demands for merchants was to consolidate all these codes,” Vijay Shekhar Sharma, chief executive officer at Paytm, told BloombergQuint in an interview. Through the new all-in-one QR-code, merchants across the country can accept payments through Rupay cards, Paytm wallets and other third-party-applications on the network, he said.

The application already has 10 million merchant users, he said, adding that Paytm targets to grow its merchant base from the existing 15 million to 25 million in the next year.

The new service allows merchants to manage payments, record transactions and avail multiple services and products such as loans and insurance.

On signing up for Paytm for Business, merchants can use existing bank accounts or open a current account with Paytm Payments Bank at the back-end, said Akash Singh, associate vice president, Paytm. The app supports all bank accounts and a Paytm Payments Bank account offers a few added benefits, he told BloombergQuint.

On No MDR

From Jan. 1, the government has abolished the merchant discount rate—a fee banks charge merchants for accepting digital payments— for all transactions through Rupay cards and UPI for businesses with an annual turnover of up to Rs 50 crore.

Sharma said the industry wants the government to reimburse them for the cost of acquiring merchants. “There is no margin in the transaction, I do not know how the acquiring banks will be compensated. So either the banks can compensate the acquiring entity or the government can continue reimbursing companies like in the past,” he said, adding that this challenges the business model for companies acquiring merchants.

Sharma, however, said small and medium enterprise clients of Paytm have saved up to Rs 500 crore as the company so far has absorbed all MDR charges on transactions up to Rs 50,000 over the last year. “Now we have waived that charge for all transactions.”

On Other Services

Sharma said in 2020 the company plans to expand the suite of financial services it offers. Stock brokerage services will be launched by March and the insurance brokerage services would be launched in the first quarter of the next fiscal 2020-21, he said.

“We want to do lending, but we do not want to do peer-to-peer lending. We would wait and see if we can convert the payments bank to a small finance bank or the other option is to partner with banks and non-bank lenders to provide credit to our customers.”

On Chasing Profit

Paytm’s parent One97 Communications Ltd. posted a net loss widened to Rs 3,959 crore in 2018-19 from Rs 1,490 crore in the previous year.

Sharma, referring to the Robin Hood allegory, said small merchants are subsidised by larger ones as margins earned by Paytm from larger merchants help absorb the costs of servicing small merchants.

“If we were to stop acquiring customers and merchants, we would be profitable today in terms of earnings before interest, tax and depreciation,” he said. “We have a deliberate intent of investing in this market to reach 50 million merchants and half a billion customers over the next few years,” he said.

There is no obligation to be profitable in two years and by raising Rs 10,000 crore recently, he said, adding Paytm has enough money to invest over the next few years to grow its market share and increase revenues.

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