Paytm Revenue Falls One Year After Regulatory Crackdown

Last year’s regulatory troubles continue to haunt Indian FinTech Paytm.

The company’s third-quarter earnings showed a 36% drop in revenue to 18.3 billion rupees (about $212 million), below the 19 billion rupees analysts had projected, Bloomberg reported Monday (Jan. 20). The company reported a net loss of 2.08 billion rupees, while analysts expected 3.32 billion rupees in losses.

Early in 2024, India’s banking regulator essentially closed down Paytm Payments Bank — the company’s banking arm — following years of warnings about unregulated data flows between that business and its parent.

With the banking business shut down, the company was forced to find new partnerships with other Indian lenders. It also sold off its movie and events ticketing business to Zomato to help reduce expenses and is waiting for permission from India’s central bank to become a payments aggregator, per the report.

Paytm’s average monthly transacting users dropped to 70 million during the quarter from 71 million in the prior quarter, according to the report. Paytm said it issued 38.3 billion rupees in merchant loans during the third quarter, up 16% from the previous quarter.

Paytm is part of a busy payments space in India, competing with the likes of Google Pay and the Walmart-linked PhonePe.

Meanwhile, the India edition of PYMNTS Intelligence’s “The Embedded Lending Opportunity” report examined the rise of embedded lending among consumers and microbusinesses and small businesses (MSBs) in that country, the most populous in the world.

The research found that 15% of consumers and 37% of MSBs in India use this type of lending. Over two-thirds of each segment reported that they are highly likely to switch to providers that offer embedded lending.

“However, users widely experience friction that detracts from their experience,” PYMNTS wrote. “[Users reported] at least one pain point. Among the most important problem areas is the application process, with 31% of consumers and 65% of MSBs that … used embedded lending reporting issues. This is an area providers must address.”