Payments major Paytm is looking to add around 1.5 million offline point-of-sale (PoS) devices like sounboxes and debit card machines every quarter for the next 18-24 months, it said in it’s analyst call held on October 21.
“We added new people within the device deployment salesforce. Our sense is we will add about 1.5 million every quarter is what we are aiming as a stable growth for the next 18-24 months for soundbox and card machines,” the company’s group chief operating officer Bhavesh Gupta told analysts.
Paytm, on October 20 reported a consolidated revenue of Rs 2,519 crore, up 32 percent for the second quarter ended September 2023 as against a revenue of Rs 1,914 crore last year, mainly on account of improving payment processing margins and growth in its loan disbursement.
While announcing the results, Paytm said that its merchants are seeking more technology and the demand for products such as soundbox and card machine and there is increasing adoption.
As of September 2023, Paytm has a merchant base of around 3.8 crore and merchant paying subscription for devices has reached 92 Lakh an increase of 44 Lakh YoY and 14 Lakh QoQ.
During Q2, Paytm launched several devices like card soundbox, pocket soundbox and music soundbox.
Paytm in June 2023 launched a new PoS device which is a mix of PoS device that accepts cards and UPI payment apart from acting as a soundbox for merchants which is an audio assisted smart device with a small portable speaker for your daily payment alerts which comes with a SIM based connectivity.
“These launches will help us in increasing TAM, merchant engagement, and card acceptance,” Paytm said in its BSE filing on Friday.
The PoS device market is presently dominated by players like Pine Labs, Razorpay and Paytm. As per RBI's data available as of May 2023, there are around 79 lakh PoS devices across India.
PhonePe is the new entrant in the market as it announced the launch of its Point-of-sale (POS) device that enables merchants to accept payments via debit cards, credit cards and UPI.
Betting big on merchant lending
Paytm is betting big on its growing merchant loan disbursal. However, it said that the personal loan will continue to stay muted.
“For the last three quarters we mentioned that the personal loan growth is muted in consultation with our lending partners the sentiment continues. Other than PL we are seeing healthy growth in our post-paid and merchant loan business,” said Gupta to analysts.
The Noida-based firm’s overall loan disbursement was recorded at Rs 16,211 crore up nearly 122 percent in the September quarter. Out of the total disbursement, merchant loans contributed Rs 3,275 crore and personal loans contributed Rs 3,927 crore. The value of Postpaid Loans distributed came at Rs 9,010 crore.
Paytm has four different types of credit portfolios – Paytm Postpaid, personal loan, merchant loan and its co-branded credit cards.
“Personal for the next couple of quarters will remain muted, if we saw 100-150% growth last year we may not see the same now. My sense is it maybe around 30%-40% year-on-year even in our base…However merchant loans, we are very bullish. In a stable case scenario, a blended credit growth of 40-50% in two-three years is healthy,” Gupta said.
Gupta also shared that within the postpaid loan business, Paytm has about 40 million merchants, out of which 20 million have signed up for the post-paid product.
“Within the 20 million, less than 1 million pay MDR (Merchant Discount Rate)...We in fact, do not mandate MDR charging to offline merchants whose post-paid percentage of what they do in a month on paytm acceptance crosses double digit,” He added.
The company has added a new lending partner ‘Tata Capital’. It earlier announced a partnership with the largest retail NBFC in India, Shriram Finance Limited, to offer financial services to its users.
“We will continue to add new lending partners…We will add another 2-3 partners, especially banks to enhance our lending and overall financial service,” Gupta said during the call.
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