Paytm’s loss widened even as revenue declined by 36% year-on-year as the once-poster star of Indian startup ecosystem continues to grapple with the Reserve Bank of India’s clampdown that significantly curtailed its payments bank business unit.
The Noida-headquartered firm’s loss more than doubled to $100 million in the quarter ending June, it disclosed Friday. The firm’s revenue shrank to $179.5 million, down from $280 million in the same quarter last year and $271 million in the quarter ending March in 2024.
The decline in revenue follows the Reserve Bank of India ordering Paytm earlier this year to cease most operations at Paytm Payments Bank, an affiliate of the financial services firm that processed much of its transactions. This is the first quarter where the full impact of RBI’s clampdown is visible on Paytm’s business.
Paytm’s loss in the quarter ending June last year stood at $42 million and $65.8 million in the quarter ending March this year.
Shares of Paytm initially declined as much as 4.4% but then rebounded to above the day’s opening, suggesting the retail investors had already priced in the impact. Paytm also warned of declining revenues last quarter.
Paytm pioneered the mobile payments push of India, courting hundreds of millions of people to its wallet app and enabling many of them to do their first digital transactions. But the fortune of the firm has 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 state-backed interoperable payments network. UPI has become the most popular way Indians transact online, processing more than 11 billion transactions each month. The surge in UPI’s popularity has hurt the relevance of the wallet business and consumer’s reliance on using card networks operated by Visa and Mastercard.
Paytm — which relies heavily today on serving merchants, including issuing them credit — said it’s continuing to see a rebound in that part of the business, which it said is “demonstrating our path to recovery.”
A company spokesperson added: “This also indicates the continued confidence of our merchant partners and consumers on our platform, and we are grateful for the trust of our stakeholder.”
The Indian central bank barred Paytm’s Payments Bank from offering many banking services, including accepting fresh deposits and credit transactions across its services earlier this year, citing “persistent non-compliance” with rules.
The move forced Paytm to ink partnerships with other banks in India for continuity of some of its core services.