Paytm faces 36 per cent revenue decline, increased losses in first quarter

Indian fintech giant Paytm reported a 36% decline in revenue and a more than doubled loss for the first quarter, attributing the downturn to a regulatory clampdown.

Revenue dropped to $179.5 million from $280 million a year earlier, while losses expanded to $100 million for the quarter ended June.

The Reserve Bank of India’s (RBI) earlier order to halt most operations at Paytm Payments Bank, a crucial subsidiary, significantly impacted the company’s financial performance.

This quarter marks the first full impact of the RBI’s restrictions, which included barring the bank from accepting new deposits and processing credit transactions due to “persistent non-compliance” with regulations.

Paytm had previously reported a loss of $42 million in the same quarter last year and $65.8 million in the fourth quarter.

To mitigate the regulatory impact, Paytm has formed partnerships with other banks in India to maintain some services.

Shares initially fell by as much as 4.4% but have since recovered, rising by 2.2%, indicating that investors had anticipated the downturn. Paytm had warned of the revenue decline last quarter.

Once a poster child of India’s startup ecosystem, Paytm’s fortunes have waned amid rising competition from Walmart-backed PhonePe and Google Pay, which now dominate the UPI network.

UPI has become the primary method for digital transactions in India, with over 11 billion transactions monthly.

Despite setbacks, Paytm remains focused on its merchant services, including issuing credit, showing signs of recovery.

A spokesperson stated, “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.”