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Shares of Paytm rose after India’s leading digital payments brand posted a narrower third-quarter loss with a surge in revenue. The stock gained as much as 7.4% in early trading Monday after the late Friday earnings report, the biggest intraday gain in about two months. Paytm’s net loss in the quarter through December shrank to […]
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Bloomberg News
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Citibank and payments platform, Paytm, have ended their partnership for a co-branded credit card Paytm CITI Card, ahead of the merger of Citibank’s commercial banking business with Axis Bank.
Both Citibank and Paytm have written to cardholders informing them that the co-branded credit card will be shut down, and offering them other cards they could opt for.
Paytm in a marketing communication said, “Your Paytm Citi credit card account will close soon. Don’t worry, continue enjoying uninterrupted benefits with Paytm HDFC Bank credit card. Switch now at zero joining fees”.
“Our partnership with One97 Communication Ltd. (Paytm) for the co-brand Citi Paytm Credit Card has come to an end. In this regard, we are delighted to offer you the Citi Rewards Credit Card as a replacement to your Citi Paytm Credit Card, should you choose to consent for the same,” Citibank said in a note accessed by businessline.
For existing Citi Rewards Credit Card customers, the bank has offered to replace the Paytm Citi cards with Citi Cash Back Credit Card. It added that the consent to swap to another Citi-branded credit Card will also serve as consent for transfer of the cardholder’s banking relationship with Citibank to Axis Bank, it said.
Failure to consent, will lead to closure of the Citi Paytm credit card effective January 30, as Citi India will no longer be able to provide services on the Citi Paytm Credit Card, it said.
In March 2022, Axis Bank had announced acquiring Citigroup’s retail banking business in India for ₹12,325 crore, subject to requisite approvals. This comprised Citibank’s consumer business, including credit cards, retail banking, wealth management and consumer loans.
Post acquiring around 30 lakh unique Citibank customers, Axis Bank will have about 2.85 crore savings accounts, over 2.3 lakh Burgundy customers and 1.06 crore cards. It will also increase Axis Bank’s credit card customer base by 31 per cent with 25 lakh additional cards, making Axis Bank amongst the top three players in the Indian market, it had then said.
In terms of ending net receivables (ENR) for credit cards, the market share of Axis Bank will increase to 15.5 per cent from 11.8 per cent, with the ENR rising 57 per cent to ₹24,400 crore post the merger.
However, Citibank told businessline that the Citi-Paytm co-branded cards were outside the scope of the agreed transaction between Citibank and Axis Bank. “Since the Citi-Paytm co-brand agreement has formally ended, these card holders have been provided the choice to easily swap their cards…which will also transition seamlessly to Axis. This is a planned transition, with customers being provided multiple options for their to-be-closed cards,” a Citibank spokesperson said.
A spokesperson for Axis Bank said that the bank does not wish to comment separately on the development.
Paytm, in turn, has around 3,00,000 activated cards as of September 2022 with average retail monthly spends of $269 – $293 per active card. The company activated around 48,000 new cards in October 2022. The tie-up with Citibank reportedly ended in November 2022.
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Anshika Kayastha
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Ever since Reliance Industries’ announcement of listing its financial services undertaking Jio Financial Services Limited on the stock markets last month, the investor interest in the firm has increased manifold.
“With secular growth drivers, the Indian financial services sector is poised to undergo a digital transformation. The sector presents a large, under penetrated and growing addressable market, especially for retail and small-business focused product categories. JFSL and its subsidiaries will leverage the technology capability of Reliance and focus on digital delivery of financial products to democratise financial services access for 1.4 billion Indians,” said RIL in a stock exchange filing in October.
“Reliance has been developing and fostering a vibrant digital led-financial services platform through various digital applications. Reliance has developed best in-class applications having high customer engagement metrics and differentiated value propositions in their respective categories. The current footprint touches more than 20 million consumers. JFS plans to launch consumer and merchant lending business based on proprietary data analytics to complement and supplement the traditional credit bureau-based underwriting. JFS will continue to evaluate organic growth, joint-venture partnerships as well as inorganic opportunities in insurance, asset management and digital broking segments,” RIL added.
On Tuesday, Macquarie’s report on Jio Financial Services had spooked Paytm stock, diving it to its record low, as the global financial services group sees Jio Financial Services becoming India’s fifth largest financial services firm. With investors anticipating a huge disruption for the Noida-headquartered Paytm, the company’s shares fell 11 per cent on BSE to close trading at Rs 475 apiece.
HDFC Bank, State Bank of India, ICICI Bank, and Axis Bank are the four top companies in the business. JFS has significant scope to expand its balance sheet. “Assuming 6.1 per cent stake in Reliance Industries Ltd realised over time, with a Rs 1 trillion net worth JFS could be the 5th largest financial services firm in the country,” said Suresh Ganapathy, Aditya Suresh, and Param Subramanian in the report.
The Reliance firm can disrupt the payments business and become a threat to other fintech models, said the report.
Jio Financial Services, Macquarie said, has articulated that it plans to launch a consumer and merchant lending business based on proprietary data analytics to complement and supplement the traditional credit bureau-based underwriting. Macquarie said the focus seems to be on consumer and merchant lending, which is the mainstay of NBFCs like Bajaj Finance and fintech firms like Paytm.
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Ashneer Grover, former Managing Director and co-founder of Bharat Pe and Shark Tank season 1 judge, on Wednesday, slammed WhatsApp Pay as India’s biggest failure as a tech product.
WhatsApp is widely used as a messaging app in the country and offers convenience for users to send money on the platform by using UPI. Grover called the app’s payment as easy as sending images, however, failed to capture the mass users.
Grover, in a tweet, said, “WhatsApp Pay has to be the biggest failure in India as a tech product. Everyone has @WhatsApp on their phone – sending money on WA using UPI is as easy as sending pic.”
Grover further added that the Meta-owned platform should have beaten other UPI-enabled Payment apps like Paytm, PhonePe and GooglePay. He said, “It should have beaten @Paytm @PhonePe @GooglePay. Country managers can’t win you markets – good riddance now !”
Grover, in another tweet, shared a screenshot of WhatsApp’s advertisement in a thread of tweets and criticised the organisation’s managers for publishing useless ads. He said that the company should have invested in improving the payment services instead of posting the ad about its safety features.
His post reads, “Yeh ad hi dekh lo – iska kya acahar daalega koi customer – itni ad WhatsApp Pay ki kar lete instead. Public policy uncle aur vakil babu dhanda chalayenge to aisa hi hoga.” [If lawyers and public policy uncle run WhatsApp’s Business, this is unavoidable.]
However, several Twitter users didn’t support Grover narrative and said that it’s not WhatsApp’s primary business model and hence, it didn’t focus primarily on the UPI payment business.
One Twitter user wrote, “They came late and haven’t done anything new. Not only WhatsApp Pay, even Amazon UPI Pay is also failure. The reason for this is that Payment & Finance is not their primary business.”
Another user replied, “Not their focus area for business model. Simple. They are already generating revenue from WhatsApp business.”
Many Twitter users also began questioning Grover’s own Bharat Pe app and asked why it has been beaten by WhatsApp Pay. Grover replied that Bharat Pe doesn’t do consumer payments – it’s a merchant service.
Grover has previously been associated with unicorns such as Bharat Pe and Grofers in leadership roles. He was also among the popular sharks on Shark Tank India but is not featured in the next season. Amit Jain, CEO and co-founder of CarDekho, replaced him.
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Despite incurring quarterly losses, fintech major Paytm continued to see steady growth in its lending business in the September quarter this fiscal. The platform disbursed 9.2 million loans worth Rs 7,313 crore in Q2, recording a 224 per cent year-on-year growth, Paytm said in its earnings statement.
“[Our] loan distribution business has scaled up significantly over the last 12 months, seeing increased adoption by users. We exited Q2 FY23 with disbursements in our loan distribution business at an annualised run-rate (ARR) of about Rs 34,000 crore,” Paytm shared.
The value of personal loans jumped 736 per cent to Rs 2,055 crore since last September (Q2 FY22). More than 40 per cent of the disbursements were made to existing Paytm Postpaid [the Buy-Now-Pay-Later product] users. The average ticket size (ATS) of personal loans stood at Rs 110,000, while ATS for merchant loans was at Rs 150,000 in Q2 FY23.
Total merchant loans disbursed amounted to Rs 1,208 crore, a YoY growth of 342 per cent. “Repeat loans continue to see a healthy take up with 50 per cent of merchants having taken a loan more than once. More than 85 per cent of value disbursed this quarter was to merchants with a deployed Paytm payment device,” the company said in exchange filings.
Meanwhile, Paytm Postpaid, which powers purchases at checkouts with instant credit, disbursed loans worth Rs 4,050 crore, growing at 449 per cent. This was driven by increasing user adoption and rising offline-online merchant acceptance, with the network reaching 15 million at the end of Q2 FY23. Paytm Postpaid’s signed-up user base has now crossed 6 million. “Postpaid continues to show significant cross-sell opportunities in personal loans and credit cards,” according to the company.
Even though Paytm’s lending business has grown consistently, the Vijay Shekhar Sharma-led company reckons it is still an under-penetrated market, with more headroom for growth and at high profit margins.
Paytm Postpaid penetration stands at 4 per cent of average Monthly Transacting Users (MTU); personal loans penetration is at a mere 0.6 per cent of average MTU; and merchant loans penetration is at 4.4 per cent of total devices deployed by Paytm. “Our penetration level for each product remains low, and gives us a long growth runway ahead,” the company said.
Overall, Paytm’s revenue in the ‘Financial Services and Others’ business was Rs 349 crore, up 293 per cent YoY, and now accounts for 18 per cent of the company’s total revenues. This is “driven by sourcing and collection revenues in our loan distribution business”, the company revealed.
It added, “Our collections efforts continue to deliver good performance, with indicative portfolio performance across loan products holding up well. We continue to seek growth and upsell opportunities as low penetration supports future growth potential, while working with our lending partners to maintain healthy credit quality.”
Also read: Nykaa, Paytm, Policy Bazaar: Lock-in periods of 10 IPOs to expire in November
Also read: Paytm Q2 losses narrow sequentially to Rs 571 crore
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Walmart-owned fintech platform PhonePe has said its core losses, excluding ESOP-related costs, have narrowed because of the strong growth across all its businesses. As per its filing, its consolidated operating revenue has more than doubled (2.3X), growing by 138 per cent to Rs 1,646 crore during the year ended March 31, 2022, from Rs 690 crore in the previous year. “The increase in revenue is primarily driven by the robust growth PhonePe has seen across all its lines of businesses,” the filing stated.
The Bengaluru-based fintech’s, which competes with Paytm, Google Pay, and Amazon Pay, EBITDA or earnings before interest, taxes, depreciation, and amortisation, without accounting for ESOP (Employee Stock Ownership Plan) costs, narrowed 15 per cent to Rs 671 crore during the year.
The company had last reported a net loss of Rs 1,727.87 crore in FY 2021, as per its latest available financial statements that it filed with the Registrar of Companies.
However, the Bengaluru-based startup’s expenses also jumped over the last year. To promote its insurance distribution business, PhonePe had floated a marketing campaign during the ICC Cricket World Cup in 2021 and IPL in 2022. This led to hike in costs, the company said.
Its employee costs also increased slightly on new hires as it added more product lines, including wealth services.
“The marketing expenses, which form a major chunk of the company’s costs, grew about 62 per cent to Rs 866 crore during the year. The increase is largely attributable to the marketing campaign for its new Insurance distribution business during the ICC Cricket World Cup in 2021, and again during IPL in 2022,” the PhonePe statement said.
The employee cost rose by 41 per cent to Rs 555 crore in FY 2022.
The fintech giant is one of the leading UPI payment platforms in the country. In 2020, it was divested from Flipkart. At present, Flipkart is still the largest shareholder in PhonePe.
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Indian digital payments and financial services company Paytm’s CEO Vijay Shekhar Sharma, on Sunday, said that he was unable to use 5G in the national capital New Delhi, despite buying a new 5G phone.
Sharma also said that he bought a new Google smartphone ‘Pixel 6a’ only to use 5G services rolled out by internet-provided Airtel but that did not help.
Sharma, in a tweet, said, “Hello @Airtel_Presence, even the Google Pixel 6a is not showing 5G network option in Delhi. All upgrades done and I bought this phone just to use 5G!” He also tagged Airtel Cares, the telco’s customer support handle.
Paytm CEO also attached a screenshot in his tweet, which shows that the 5G network was not displayed as the preferred network type.
Moreover, in another tweet, Sharma explained that this was because of Google, the smartphone manufacturer that is yet to release a software update for 5G support.
Sharma, tagging Google in another tweet, said, “Ouch! Hello @GoogleIndia do you think India should get 5G handset software upgrade soon? @GooglePixel_US”
Paytm CEO’s tweet went viral across the social platform, with other people joining in and raising the same issue.
Another Twitter user Mudit Mathur replied to Paytm CEO’s tweet, and said “The update will come only in December!” He also attached a cropped image of a conversation with Google support that reads “Our current target is to release 5G as part of our December feature drop.”
Airtel launched its 5G internet services on October 6 and became the first telecom operator to officially roll out 5G services in India. It has launched Airtel 5G Plus service for 8 cities – Delhi, Mumbai, Chennai, Bengaluru, Hyderabad, Siliguri, Nagpur and Varanasi. The company also claims that its users won’t need to change their SIM card as the existing one will now be 5G-enabled.
On the other hand, Reliance Jio is rolling out 5G service in four cities including – Delhi, Kolkata, Mumbai and Varanasi. Reliance Jio has also launched the Jio 5G Welcome Offer under which eligible users get unlimited 5G data and 1gbps data speed free of cost until the company announces 5G plans in India.
Here’s how to check if your phone has 5G connectivity or not:
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