Indian fintech Paytm’s struggles won’t seem to end. The company on Friday reported that its revenue declined by 36% and its loss more than doubled in the first quarter as it continues to grapple with a regulatory clampdown that has significantly curtailed business at its payments bank subsidiary. Once the poster child of India’s startup […]
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Indian fintech Paytm’s struggles won’t seem to end. The company on Friday reported that its revenue declined by 36% and its loss more than doubled in the first quarter as it continues to grapple with a regulatory clampdown that has significantly curtailed business at its payments bank subsidiary.
Once the poster child of India’s startup ecosystem, Paytm’s loss widened to $100 million in the first quarter ended June, while revenue shrank to $179.5 million from $280 million a year earlier.
Paytm reported a loss of $42 million in the first quarter last year, and a loss of $65.8 million in the fourth quarter.
The decline in revenues is a direct result of the Reserve Bank of India ordering the company earlier this year to cease most operations at Paytm Payments Bank, a subsidiary that processed much of the mobile payments that the company depended on. This is the first quarter where the full impact of RBI’s clampdown is visible on Paytm’s business.
The Indian central bank barred Paytm’s Payments Bank from offering many banking services, including accepting fresh deposits and credit transactions across its services, citing “persistent non-compliance” with rules.
The move forced Paytm to ink partnerships with other banks in India to continue offering some of its core services.
Shares of Paytm initially declined as much as 4.4%, but now have recovered and are up 2.2%, suggesting investors had already priced in the impact. Paytm had warned of the decline in revenue last quarter.
Paytm pioneered the mobile payments push in India, courting hundreds of millions of people to its wallet app, and enabling many of them to make their first digital transactions. But the firm’s fortunes have dwindled in recent years amid growing competition from Walmart-backed PhonePe and Google Pay.
PhonePe and Google Pay process more than 86% of all transactions on UPI, a government-backed interoperable payments network. UPI has become the most popular way Indians transact online, and accounts for more than 11 billion transactions each month. The surge in UPI’s popularity has hurt the relevance of wallet businesses and consumer’s reliance on card networks operated by Visa and Mastercard.
Paytm, which relies heavily on serving merchants, including issuing them credit, said that part of the business is recovering, “demonstrating our path to recovery.”
A company spokesperson said in a statement: “This also indicates the continued confidence of our merchant partners and consumers on our platform, and we are grateful for the trust of our stakeholders.”
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