Prosus-backed PayU sees 22% surge in revenue on the back of India payments business

Anirban Mukherjee, CEO, PayU

Global investment group Prosus has said that its payments and fintech segment grew  22 percent to $1.1 billion in FY24 mainly driven by growth in core payments operations in India, India credit and business from GPO (Eastern Europe, Africa and Latin America).

"Strong revenue growth (PayU) and improved profitability were driven by improved operating leverage and effective cost control, despite regulatory hurdles in India," the firm said in its annual report.

Prosus' core PSP revenue, which saw a jump of 41 percent, is primarily made up of payments operations in India, GPO, Iyzico (Turkey)and Red Dot Payments (south-east Asia).

However, India alone contributes 46 percent to this revenue and is the largest market in PayU’s PSP business.

On group level, Prosus reported a consolidated revenue of $5.5 billion, an increase of 11 percent, while the trading loss came down to $118 million in FY24.

The sale of GPO business announced in August 2023,  excluding Turkey and Red Dot Payments, to Rapyd is expected to close in the second half of calendar 2024.

India growth: Revenue up 11%, profit margin goes negative 

A moderated growth, PayU had witnessed a slowdown in its payment business after being barred to onboard new merchants for its online payment aggregation business since January 2023.

The banking regulator had returned the fintech firm's application to operate as a Payment Aggregator (PA) due to its complex corporate structure and directed it to reapply for the same.

However, after a wait of nearly 15 months, the RBI has given its in-principle nod to PayU in April to operate as a PA and restart onboarding new merchants.

The impact of the ban reflected in PayU India's FY24 results.

"While the payments business in India achieved a 3 percent trading profit margin in FY23, this worsened to -3 percent in FY24 due to change in merchant and payment method mix (predominantly driven by the embargo on merchant onboarding)," the firm said.

For FY24, PayU India's revenue grew 11 percent to $444 million driven by increasing volumes from existing merchants and growing value-added services such as affordability, the firm said.

The fintech firm processed over $71 billion in total payments volume, up 22 percent on last year, on the back of growth in e-commerce, financial services and government segments.

PayU said its 'payment processing transaction costs' have increased, particularly in India.

SMB credit focus

Besides payments, PayU offer credit services, including buy-now/pay-later (BNPL) and personal loans via Lazypay, in India.

In a bid to diversify portfolio, PayU is said to have started pilots by providing loans to small and medium businesses (SMB) in 2024.

"Our credit business grew revenue 29 percent to $107 million, despite a slowdown in loan issuances as part of a response to evaluate new regulations shared by the RBI," it said. However, the losses doubled to $20 million at the same time.

PayU disbursed credit worth $873 million in loans and grew its loan book to  $468 million in FY24.

"We are present in high-growth markets and we will continue to emphasise India. With the in-principal authorisation by RBI, India is expected to demonstrate strong growth in payments. The credit business is also likely to benefit from increasing demand in India. PayU is well placed to benefit from this growth," it added.

(This is a developing story)