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Digital lending is the new buzzword in the financial world. There are over 1,100 apps that give loans and over 600 of them are illegal, according to a report by the Reserve Bank of India’s (RBI) working group. Digital loan providers take money from banks and other financial lenders and route it to people who borrow online. Banks give them the money on the guarantee that a certain portion of the loans will be repaid by the app owners, if the end borrower defaults. This agreement with banks to give loans to customers is called <keyword id="12642631" type="General" weightage="20" keywordseo="first-loss-default-guarantee" source="Orion">First Loss Default Guarantee</keyword> (FLDG). And the RBI working group doesn't like such agreements i.e., firms regulated by RBI should not get into such agreements with unregulated or illegal players. In fact, the RBI has received a significantly increasing number of complaints against illegal <keyword id="4795429" type="General" weightage="20" keywordseo="digital-lending-apps" source="Orion">digital lending apps</keyword> i.e., around 2,562 complaints from January 2020 to March 2021. Concerns related to digital lending Privacy and data security You may not even know, but while accepting the ‘terms and regulations’ and giving permission to the media, you give away access to a lot of information on your phone. The threat to you is now these apps can easily track your spending patterns, social media activity, location and much more. Below-given table shows the critical permissions requested versus the percentage of apps requesting these permissions: <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Permission to read </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">% of digital lending apps </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Location </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Camera </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Contacts </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">21% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Make phone calls </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">11% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Record audio </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">11% </td></tr></tbody><tbody></tbody><tbody></tbody><tbody></tbody></table>(Data source: Report by RBI’s working group) In digital credit markets, consumer data and other information is increasingly used and shared in the lending and borrowing process. The working group of the RBI has made these recommendations to regulate the digital lending space: Regulation for ‘Digital only’ firms In the emergence of a growing fintech ecosystem, RBI could set up a regulatory framework particularly for fintech firms. It may also allow digital lenders to innovate and experiment with several lending products under its supervision. Nodal agency to authorise trusted digital lenders Another recommendation is to set up a nodal agency to ensure that only authorised and trusted digital lending apps are used by consumers. The independent body could be called as Digital India Trust Agency (DIGITA). Verified apps Only apps verified by RBI’s independent body (DIGITA) should be allowed to run lending business. Guidelines for digital apps RBI could form guidelines to comply with various basic technology standards/requirements, including those on cyber security as a pre-condition to offer digital lending services. Data governance Adding to the regulatory norms suggestions, the central bank could lay down restrictions on data and privacy policy on lending apps. Large fintech firms may benefit if RBI sets up these regulations While the lending space is growing rapidly as people are looking to borrow funds amid an unexpected crisis, there are also high chances of loan defaults. And if multiple loan defaults happen at the same time, these fintech firms will have to take the burden on their books. This means some of them may not even survive after a period of time and worsen the economic situation that we are already facing. Most of these concerns may settle down if RBI approves and validates the recommendations made by the working group to run a lending business. If this comes true, many fintech firms that do not meet RBI criteria to run a lending business may disappear. This ultimately leads to the existence of only strong players who can then acquire additional market share. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/musk-praises-new-twitter-ceo-parag-agrawal-says-usa-benefits-from-indian-talent/articleshow/88004684.cms">Musk praises new Twitter CEO Parag Agrawal, says 'USA benefits from Indian talent'</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/banking-stocks-give-up-gains-in-a-battle-between-bears-and-bargain-hunters/articleshow/88002702.cms">Banks give up gains in a battle between bears and bargain hunters</a>

Going to take a digital loan? Read this before you do it

<ul><li>Unsecured <keyword id="35520" type="General" weightage="50" keywordseo="personal-loans" source="Orion">personal loans</keyword> account for 37% of Bajaj Finance’s loan book, while it is at 21% for Aditya Birla Capital and it is 27% for IIFL (standalone).</li><li>Tighter norms may impact <keyword id="6357120" type="General" weightage="80" keywordseo="paytm" source="Orion">Paytm</keyword>’s break-even timelines if there is a slowdown in loan disbursals.</li><li><keyword id="706950" type="General" weightage="50" keywordseo="aditya-birla-finance" source="Orion">Aditya Birla Finance</keyword> and IIFL may need to infuse capital after the November 16 tightening of capital norms by RBI. </li></ul>Reserve Bank of India’s <a href="https://www.businessinsider.in/finance/news/rbi-tightens-norms-on-personal-loans-for-banks-and-nbfcs-stock-reaction/articleshow/105277492.cms" data-type="tilCustomLink" target="_blank">crackdown on personal loan disbursals</a> by banks and non-banking finance companies will have a cascading effect on the sector. But the worst hit will be non-bank players as they will be hit on both asset and the liability sides. While they will have to pay higher rates while borrowing from banks and bond markets, they will also have to pass on higher costs to borrowers. This will slow down the rapid growth in their balance sheet, which has been driven by rapid growth in the disbursement of unsecured personal/consumer loans. According to analysts, non banking finance companies like Paytm and Bajaj Finance would be most affected by RBI’s move to tighten capital norms on unsecured loans and also loans disbursed to non banks. This will not only make lending more expensive for non banks but in many cases will also force them to raise more capital ahead of schedule. <keyword id="116253" type="General" weightage="80" keywordseo="sbi-cards" source="Orion">SBI Cards</keyword>, Bajaj Finance, IIFL and Aditya Birla have relatively higher proportion of unsecured loans on their portfolio and, therefore, tighter capital norms will impact them the most. Unsecured personal loans account for 37% of Bajaj Finance’s loan book, while it is 21% for Aditya Birla Capital and it is 27% for IIFL (standalone), according to Jefferies. According to Jefferies, SBI Cards can see an estimated.400 basis points cut in its Tier 1 capital adequacy ratio while Bajaj Finance can see 220 basis point hair cut to Tier 1 CAR. However, both NBFCs are well capitalised and have higher return on equity (low capital consumption). “IIFL (standalone entity) and Aditya Birla Capital can see a 50-80 bps haircut to Tier 1 capital, which can lower their Tier 1 to 13%/15%. IIFL may need to infuse capital in the standalone entity; at ABFL, next phase of capital raise may get advanced,” the global investment bank said in a report. in funding costs. SBI Cards faces highest drag on Tier I CAR and highest dependence on bank-funding. The tighter norms will not impact NBFCs but even fintechs like Paytm. Loan disbursals by fintechs will also slow down from the current levels as they may find it hard to raise funds and even pass on higher cost loans to consumers. Japanese investment bank Nomura says in a report, that in the past 18 months, nearly 25%-30% of incremental growth for NBFCs has come from unsecured retail. Any moderation in unsecured credit for NBFCs will hence have an impact on both growth and profitability for NBFCs in our view. Moreover, the regulatory action comes at a time when credit costs in these segments have started to inch up. For Paytm's lending partners, higher funding costs and increased capital requirements will affect product profitability in the buy-now-pay-later and personal loans segments. Non bank lenders like private banks may also start to improve their underwriting standards after this which will impact overall growth. Jefferies says: “We also watch out for the pricing environment and ability of Paytm to pass-through hike in funding costs. In our base case earnings, we forecast consumer loan disbursal growth to normalise from 90% in FY24 to 40% in FY25 and 35% in FY26. Any additional 10 percentage point slower disbursal growth (vs. base case) in FY25/26E can lead to 5-10% impact on lending revenues and ~2-3% impact on overall contributions, which may impact break-even timelines as well. Paytm may be able to compensate for this through faster ramp-up of its merchant financing business.” ALSO READ: <a href="https://www.businessinsider.in/personal-finance/news/the-dark-truth-behind-rbis-crackdown-on-easy-personal-loans/articleshow/105287366.cms" data-type="tilCustomLink" target="_blank">The dark truth behind RBI’s crackdown on easy personal loans</a>

RBI crackdown on personal loans – Bajaj Finance, IIFL, Aditya Birla and SBI Cards to take a bigger hit, say analysts

India’s leading mobile payments and financial services company <keyword id="6357120" type="General" weightage="20" keywordseo="paytm" source="Orion">Paytm</keyword> has been instrumental in empowering millions of small and medium businesses with its innovative payment solutions like All-in-One QR and Soundbox. From the local grocery stores to the street vendors dotting the cities, highways, and remote corners of India, Paytm is helping merchants join the nation's thriving digital economy. Paytm’s All-in-One QR is a simple and secure way for merchants to receive payments from any UPI app, Paytm Wallet and even Paytm Postpaid. The fintech pioneer has made access to technology easy and affordable for merchants by identifying merchant problems that can be solved using technology. Paytm pioneered Soundbox in India, a cutting-edge technological innovation that has added unparalleled convenience for merchants. <keyword id="9418617" type="General" weightage="20" keywordseo="paytm-soundbox" source="Orion">Paytm Soundbox</keyword> is an innovative device that helps merchants with instant voice notifications for every payment received via Paytm QR. The device supports 11 languages and allows merchants to keep track of payments, and prevents false confirmations and customer fraud. Paytm merchants derive value by becoming a part of the company’s ecosystem. It has a registered merchant base of 31.4 million (as of December 2022), increasing by 26% year-on-year. This is one of India’s largest merchant networks. Paytm is focused on expanding its merchant network to cover a diverse range of businesses from various sectors. Its QR and Soundbox have been widely adopted by merchants across India in various sectors such as retail, grocery, food, transportation, and more. In partnership with lenders, the company also offers loans to eligible merchants to enable their business growth. The number of merchant loans disbursed by Paytm grew 253% YoY in Q3 FY 2023, while the value of merchant loans grew 285% YoY to ₹1,825 crore. More than 85% of the value disbursed during the quarter was to merchants with a deployed Paytm payment device. Paytm’s management had said in the company’s Q3 FY 2023 earnings calls that its merchants are spread across more than 450 cities and towns and it plans to expand this to approximately 1,000 towns in the next two to three years. Paytm continues to strengthen its position as the leader in offline payments. As of 31st March 2023, more than 6.8 million merchants are paying subscriptions for its payment devices like Soundbox and PoS. From temples and gardens to street vendors and grocery stores, Paytm has also leveraged its large and growing merchant network to create a strong foothold in the digital lending market in India. As the driving force behind the digital transformation of countless businesses, Paytm has acquired a large number of merchants from big and small cities across the country. Paytm users often share heartwarming images and stories of merchants of all ages and sizes who have seamlessly transitioned to digital payments, thanks to the fintech pioneer. <div type="twitter" handle="VRaj_In" handlename="𝕍ℝaj 🇮🇳" image="http://pbs.twimg.com/profile_images/1388147324656910338/FBjGWBvl_normal.jpg" favoritecount="9" retweetcount="0" status="@vijayshekhar 82 year old mausi accepting paytm . India has revolutionized the way people transact and #Paytm has b… https://t.co/B4i5u4JYD4" createdat="1681220925000" id="1645785962797203461"></div> “82 year old mausi accepting paytm . India has revolutionized the way people transact and #Paytm has been on forefront,” tweeted a user recently. He shared a picture of an elderly woman who is selling snacks accepting Paytm. <div type="twitter" handle="ankit_k87" handlename="Kumar Ankit" image="http://pbs.twimg.com/profile_images/1623014628019310593/dy2aljI9_normal.jpg" favoritecount="78" retweetcount="4" status="My car broke down in middle of nowhere in Gaya, Bihar. Nearest mechanic and Petrol pump is 10 kms away. But, you ha… https://t.co/KTfg6ZPJJP" createdat="1680335625000" id="1642072746392944641"></div> Another Twitter user, Kumar Ankit, shares a picture of a grocery shop in remote Bihar accepting payments with Paytm QR. “My car broke down in middle of nowhere in Gaya, Bihar. Nearest mechanic and Petrol pump is 10 kms away. But, you have a small shop with Paytm. Interestingly the QR code was covered in plastic - he said “bhaiya aise saaf rehta ha”. He gets 10-15k per month on Paytm even here,” he captioned the image. The widespread adoption of Paytm’s payment solutions including All-in-One QR, Soundbox and POS has made Paytm synonymous with mobile payments in India, enabling small and medium merchants to keep up with the rapidly evolving and growing digital payments landscape. Disclaimer: This article is generated and published by the Insider Studios team. You can get in touch with them on insiderstudios@businessinsider.in

How Paytm became the leader in merchant payments with pioneering solutions like Paytm QR and Soundbox

Mumbai, <keyword id="3526030" type="General" weightage="20" keywordseo="fino-payments-bank" source="Orion">Fino Payments Bank</keyword> is keen to become a <keyword id="6382595" type="General" weightage="20" keywordseo="small-finance-bank" source="Orion">small finance bank</keyword> after having completed five years of operations, Managing Director <keyword id="1336488" type="General" weightage="50" keywordseo="rishi-gupta" source="Orion">Rishi Gupta</keyword> said. The Navi Mumbai-based company is a subsidiary of Fino Paytech, which is backed by marquee investors such as Bharat Petroleum, ICICI Group, Blackstone, IFC, Intel and LIC, among others. The company started operations in July 2017 with 410 branches to become the fourth payments bank after <keyword id="6385180" type="General" weightage="20" keywordseo="airtel-payments-bank" source="Orion">Airtel Payments Bank</keyword>, <keyword id="3388668" type="General" weightage="20" keywordseo="india-post-payments-bank" source="Orion">India Post Payments Bank</keyword> and <keyword id="3236791" type="General" weightage="20" keywordseo="paytm-payments-bank" source="Orion">Paytm Payments Bank</keyword>. Fino, which was a remittance service provider, has converted most of its Fino Money Mart outlets into bank branches after getting licence from the Reserve Bank. Also, Fino is the only lender in this space being traded on the exchanges. "From regulatory and compliance perspectives we are eligible for an upgrade to a small finance bank, having completed the mandatory five years of operations. Our board also favours such a conversion and soon we'll be moving an application with the RBI in this regard," Gupta told PTI. On why to stop at small finance bank, and not a full service bank, Gupta said, the company is too small to directly convert to a full service commercial bank from capital and capabilities perspectives. He said, till the upgrade happens, the bank will grow the business with a focus on tie-ups with fintechs under the Fino 2.0 initiative on building digital assets and strengthen the digital offerings. Already, it has tied up with the Sequoia Capital-backed Hubble to offer a spending account, offering customers better value on their lifestyle spends. People can park their funds, spend and save up to 10 per cent on all purchases made from the account. "We're looking at more such tie-ups in the fintech space," Gupta said, adding the company is also tying up with NBFCs from retail lending as payments partner and such loan remains on the book of the NBFC. "We've already tied up with two such shadow banks-Kredbee and Myshublaon," he said. In Q4FY23, its revenue rose 13 per cent to Rs 323 crore and net income jumped 25 per cent to Rs 22 crore with net margin rising to 6.8 per cent from 6.2 per cent. Its deposits grew 66 per cent to Rs 1,200 crore in FY23 from Rs 724 crore in FY22 of which 20 per cent are the low-cost Casa deposits. Gupta said the bank has been adding 2.5 lakh customers monthly on an average in FY24, taking the overall customer base to 71 lakh now. Another new service they began is offering recurring deposits, he said, adding the bank is also working on launching a virtual debit card. Also, under the pipeline is gold loans, mutual funds and medical insurance, Gupta said.

Fino Payments Bank has its eyes set on becoming a small finance bank

India’s payment revolution is showing no signs of slowing down, as both merchants and consumers continue to embrace digital payment technology with enthusiasm. <keyword id="9418617" type="General" weightage="20" keywordseo="paytm-soundbox" source="Orion">Paytm Soundbox</keyword>, the pioneering IoT device launched to address a specific need amongst the merchants, has witnessed tremendous adoption since its launch. This battery-operated device offers a range of features that have made it the most preferred choice for merchants in the country to accept payments, including <keyword id="6357120" type="General" weightage="20" keywordseo="paytm" source="Orion">Paytm</keyword>’s All-In-One QR, 4G support, cashback, and seven-day battery life. Paytm has further strengthened their leadership in offline payments with a cumulative deployment of 5.8 million devices including PoS and Soundbox, according to their Operating Performance Update for Q3FY23. This represents an increase of 1 million merchants paying subscriptions for payment devices in the quarter and marks the second consecutive quarter in which they have achieved device deployment of 1 million. In a year, Paytm has gone from 2 million devices to 5.8 million devices. Paytm's focus on subscription services continues to expand as they focus on creating additional payment monetization beyond MDR. With its subscription-as-a-service model, the strong adoption of devices drives higher payment volumes and subscription revenues, while increasing the funnel for their high-margin merchant loan distribution business. The robust adoption of subscription products by merchants is making payments increasingly monetizable and profitable for them. Paytm Soundbox offers merchants instant audio confirmation in any of the 11 supported languages for every payment made through a Paytm QR code. This has helped to build trust between merchants and customers, as merchants can quickly confirm successful payments. It supports multiple payment methods such as Paytm Wallet, Paytm Postpaid, Paytm UPI and other UPI apps, net banking, and cards, therefore providing more flexibility and convenience to the merchants. By leveraging their insights into merchants’ payment flow, they are able to offer them the ability to seamlessly obtain loans from their financial institution partners. This capability makes it more attractive for merchants to use their platform for all their payment and financial services needs. According to Paytm's Q2FY23 earnings presentation, merchants who also have Paytm devices accounted for over 85% of merchant loan disbursals. Their lending partners are able to rely on their distribution and merchant insights, otherwise unavailable to them. Merchants are increasingly willing to pay for technology that enhances the trustworthiness of digital payments. This presents them with a great opportunity to enable financial inclusion for a large number of merchants. This journey means that the relationship they have with their merchants expands over time from QR payments to devices to credit. The penetration level for merchant loans remains low at just 4.4% of total devices deployed (as per Q2FY23 earnings presentation), suggesting that there is significant headroom for growth in this area. As Paytm continues to add more devices, the total market for merchant loans will continue to expand, providing opportunities for further growth. Disclaimer : This article has been reproduced from Paytm's blog. The opinions expressed are those of the organization and do not necessarily reflect the views of Business Insider India. For further details, you can get in touch with our team on insiderstudios@businessinsider.in

Device deployment hits 1 million for two straight quarters: How Paytm Soundbox is fuelling growth

From a cash-reliant nation to a digital-first economy, India's payment landscape has undergone a massive transformation thanks to QR and digital payments pioneer <keyword id="6357120" type="General" weightage="100" keywordseo="paytm" source="Orion">Paytm</keyword>'s range of innovative products tailored to meet the needs of Indian consumers and merchants. The results of Paytm's pioneering work speak for themselves. In fact, OCL’s associate Paytm Payments Bank is a leader in <keyword id="6358921" type="General" weightage="20" keywordseo="upi" source="Orion">UPI</keyword> P2M payments, as the largest acquiring and beneficiary bank. Its revolutionary solutions have transformed India's payments and commerce landscape, making <keyword id="2970472" type="General" weightage="20" keywordseo="digital-transactions" source="Orion">digital transactions</keyword> accessible across the length and breadth of the country. Paytm Wallet, launched in 2014, was widely adopted by those making digital and mobile payments for the first time. The Vijay Shekhar Sharma-led company’s trailblazing spirit continued with the launch of its QR payment system in 2015. This solution was a massive win for merchants, especially small shopkeepers, who could accept digital payments at zero upfront costs, without requiring an internet connection or a POS machine. Paytm recognized the need for a payment solution that would be affordable, easy to use, and safe for both retailers and consumers. As a pioneer in the digital payments space, Paytm developed the QR code-based payment method for brick-and-mortar stores, becoming the first company to introduce this groundbreaking technology to in-store merchants throughout India. Paytm's product readiness and scalable platform helped accelerate the adoption of QR codes among merchants when the Indian government announced demonetisation in 2016. The company’s QR code solution was enhanced in January 2020 with the All-in-One QR, which became the sole source QR code for merchants to accept payments from Paytm Payment Instruments, third-party sources, and all UPI instruments. <div type="image" title="1200x900-a" msid="98124799" hostid="261" sizebytes="17044" caption="&amp;lt;p&amp;gt;UPI ecosystem&amp;lt;/p&amp;gt;"></div> In recent years, Paytm UPI has driven India's transition to non-cash payments for both P2P fund transfers and merchant payments. Paytm UPI has been driving the country's digital transaction volumes in recent years, and the company’s rapid deployment of low-cost QR codes has brought underpenetrated merchant segments that once preferred cash-based payments into the digital payments fold. During the Q3 FY 2023 earnings call, Paytm Founder and CEO Vijay Shekhar Sharma said that the company's focus on merchant payments has created a scalable UPI revenue model in subscription. “I feel highly positive and inspired by the adoption of our device business, especially Soundbox which has led to significant scale in UPI acquiring,” he said. The company has built a merchant network of over 30 million businesses spread across 450 cities and towns, and it plans to expand this to about 1,000 towns over the next two to three years. Today, more merchants use Paytm's QR codes compared to any other payments company in India. But Paytm's innovation didn't stop there. In 2020, the company launched its Soundbox, a state-of-the-art payment acceptance device that uses IoT technology to provide real-time audio confirmation for payment completion, ensuring a seamless payment experience for customers and merchants alike. Today, Paytm Soundbox is seen in every merchant’s shop and has become an industry standard where every other fintech company is hopping on the Soundbox bandwagon. The fintech giant continues to strengthen its market leadership in offline devices, with the number of merchants paying subscriptions for payment devices like Paytm Soundbox and POS reaching 6.1 million at the end of January 2023, an increase of 0.3 million in the month. Paytm's success in revolutionizing digital payments in India has made it one of the most innovative and impactful companies in the fintech industry. With its wide range of payment options and payment devices, Paytm has made it easy for millions of Indian consumers and merchants to transition to a cashless economy. Building on this success, Paytm is now also leading the charge in digital lending, offering convenient loans to people and businesses across the country. Disclaimer: This article is generated and published by the Insider Studios team. You can get in touch with them on insiderstudios@businessinsider.in

How fintech leader Paytm revolutionised QR and took UPI to every nook & corner of India

<keyword id="6357120" type="General" weightage="20" keywordseo="paytm" source="Orion">Paytm</keyword> has been witnessing a sustained growth in revenues, which reached ₹2,062 crores in the Dec-23 quarter, representing a 2.5x growth from ₹815 crores in Mar-21. The company’s strong growth momentum continued during the third quarter of FY23 due to an increase in merchant subscription revenues, growth in loan distribution, and momentum in the commerce business. In a letter to shareholders, Paytm’s Founder &amp; CEO, Vijay Shekhar Sharma said Paytm achieved the milestone of EBITDA before ESOP cost profitability in Q3 without losing sight of growth opportunities and keeping all compliances as well as risk factors under strict watch. “I believe the opportunity in our country for newer payment and credit disbursement solutions is huge, which gives us quality revenue and attractive profit pools to address,” Sharma wrote. Paytm outlined the various growth drivers for our businesses in the earnings presentation. India is witnessing a revolution in the field of digital payments but Paytm believes these are still in the early days with massive growth potential. Growth in Unified Payments Interface (<keyword id="6358921" type="General" weightage="100" keywordseo="upi" source="Orion">UPI</keyword>), cards, and EMI-led payments is yet to reach the masses. The National Payments Corporation of India (NPCI) has been innovating with UPI to increase the adoption of digital payments. Superior user experience, interoperability and security have made Paytm UPI the most preferred payment option for Indians. Paytm has launched UPI LITE which allows instant, multiple small-value UPI payments having a value of less than or equal to ₹200. UPI LITE will further enhance user experience and unclutter their bank statements. Paytm has introduced RuPay Credit Card on UPI, enhancing the payment experience for both consumers and merchants. Customers will benefit from the ease and the increased opportunity to use their credit cards and merchants will benefit from the increase in consumption by being part of the credit ecosystem with the acceptance of credit cards using assets like QR codes. In the near term, Paytm believes that India could have the potential of 10 crore merchant entities and more than 50 crore payment customers. Subscriptions for payment and other services will be a large market. On the lending side, Paytm feels there is a long way to go, and is working on integrating with large NBFCs and banks to leverage the full potential of small digital credit on the Paytm platform. In Q3 FY23, the value of loans disbursed by Paytm’s financial institution partners through Paytm’s platform grew to ₹9,958 crores, a growth of 357% YoY and 36% QoQ. Disclaimer : This article has been reproduced from Paytm's blog. The opinions expressed are those of the organization and do not necessarily reflect the views of Business Insider India. For further details, you can get in touch with our team on insiderstudios@businessinsider.in

From UPI innovations to digital credit potential – these are the growth drivers in Paytm’s business

<keyword id="6357120" type="General" weightage="20" keywordseo="paytm" source="Orion">Paytm</keyword> grew their revenues by 42% YOY in the third quarter of FY23 to ₹2,062 crore. The growth was driven by an increase in merchant subscription revenues, growth in loan distribution, and momentum in the commerce business. Given the timing of the accrual of the UPI incentive, there was no UPI incentive recorded in this quarter. Paytm’s focus on subscription services to create additional payment monetization continues to expand with the number of merchants paying subscriptions for payment devices like Paytm Soundbox and POS reaching 6.1 million at the end of January, an increase of 0.3 million in the month. The number of merchants paying subscriptions increased by one million in Q3 FY23. With their subscription-as-a-service model, the strong adoption of devices drives subscription revenues and higher payment volumes, while increasing the funnel for their merchant loan distribution. Paytm is seeing sustained traction in subscriptions and earning more than ₹100 per month per device. Further, Paytm has received additional incentives on select installations from partner banks, RBI and NABARD etc. Paytm’s founder and CEO Vijay Shekhar Sharma during the recent earnings call said that Paytm’s focus with merchants is not limited to just devices but includes various other subscription line items. The total merchant GMV processed through Paytm’s platform in Q3 FY 2023 aggregated to ₹3.5 lakh crore, marking a YoY growth of 38%. <keyword id="7656598" type="General" weightage="20" keywordseo="merchant-payments" source="Orion">Merchant payments</keyword> volume in the month of January was ₹1.2 lakh crore, growing 44% from a year ago. Paytm’s focus over the past few quarters continues to be on payment volumes that generate profitability for Paytm, either through net payments margin or from direct upsell potential. During the earnings call, founder and CEO Vijay Shekhar Sharma said that Paytm’s focus on merchant payments has created a scalable UPI revenue model in subscription. “I feel highly positive and inspired by the adoption of our device business, especially Soundbox which has led to significant scale in UPI acquiring,” he said. UPI has emerged as one of the key low CAC customers and merchant acquisition channels for us. Paytm’s registered merchant base expanded to 31.4 million at the end of December 2022. Their CEO Vijay Shekhar Sharma also mentioned that Paytm’s revenue from merchant business in the payments industry is particularly higher than every other peer company. “Somebody chose P2P, somebody chose P2M, we chose merchant business. Our acquiring side market share, which NPCI does not yet declare, once they start declaring, you will see how well Paytm is capitalized there over other UPI players, also standalone UPI players or other payment aggregators,” he added. As per the notification received from the Government of India on January 11, 2023, Paytm estimates that for Q1-Q3 FY 2023, it will receive ₹130 crore of UPI incentives in Q4 FY 2023. Paytm leverages their two-sided ecosystem of consumers and merchants and rich insights from their platform to cross-sell high-margin financial services and merchant services. Paytm enables their merchants with tech solutions that allow them to accept payments through a wide variety of instruments and by deploying subscription-based devices that help with reconciliations. Paytm also enables commerce and allows them to advertise, sell gift vouchers, deals and tickets. For consumers and merchants, Paytm offers various lending products such as Paytm Postpaid (BNPL), personal loans and merchant loans, with their financial institution partners. Paytm’s lending business continues to scale providing attractive upsell revenues. Their portfolio qualities have been demonstrated over multiple payment cycles. Paytm believes that upselling lending products is a scalable opportunity and sees a large profit pool in their loan distribution business. The penetration for merchant loans is 5.2% of device merchants. Paytm believes there is a long runway for growth as their payments consumer and merchant base offers a large addressable market for loan distribution. Disclaimer : This article has been reproduced from Paytm's blog. The opinions expressed are those of the organization and do not necessarily reflect the views of Business Insider India. For further details, you can get in touch with our team on insiderstudios@businessinsider.in

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