Vijay Shekhar Sharma, Founder, and CEO of Indian digital payment giant PayTM recently announced that his company expects to turn profitable after two years as it is monetizing the existing customer base and eyes financial services as its next major frontier for growth.
As per an interview with The Press Trust of India, Sharma said that PayTM is betting heavily on financial services, commerce, and payments as three key focus areas.
PayTM’s growth is divided into three phases:
- first three years of finding the right product-market fit
- the next was revenue and monetization; and
- the last phase will be about profitability and free cash flows., said Sharma.
He further claimed that “We are in the second phase of that journey.”
The Noida-based fintech firm started deploying QR codes in 2015 and by 2018-19 completed its product-market fit. The firm also saw an astonishing rise after the infamous demonetization in 2016.
Commenting on the timeline for hitting profits, Shekhar said, “I would say at least 2 years because we are also a large dominant market share company and we wouldn’t want to lose market share while becoming profitable next quarter.
In the last 12 months, PayTM has seen pre-tax losses cut – thanks to monetization, and not reckless cost-cutting, he said, adding business like PayTM Payments Bank, commerce and cloud were already profitable, while PayTM FirstGames and PayTM Mall are “close to profitability”.
Earlier in 2019, PayTM had raised $1bn in funding from US-based asset management firm T Rowe Price along with existing investors Softbank and Alibaba in an attempt to fund expansion plans. The company faces severe competition from tech giant Google’s payment business Google Pay and Flipkart-owned PhonePe.
PayTM also said that it plans to invest about $1.4bn over the next three years to expand financial services. The company currently stands at a whopping valuation of $16bn, making it the biggest Indian Unicorn company.
When asked about the underperforming businesses under PayTM’s parent One97 Communication Ltd, Sharma said that investments were focused on expanding the offline merchant base.
“Overall, offline merchant expansion and technology is where the investment is happening,” he said.
Recently, the company had also announced that it is aiming to add close to 10mn merchants to its platform over the next 12-18 months as it brings new features to its payments platform.
Indian fintech and payment industry has been witnessing several innovations and investments from the past couple of months. Online retail giant Amazon has also introduced its payment platform Amazon Pay in competition with Google and PayTM.
Recently, NPCI also gave approval to WhatsApp’s payment arm WhatsApp pay to start services in India in a phased manner. Fintech startup BharatPe has also raised $75mn this week from Ribbit Capital and Coatue Management to expand its offline presence. While all this is good news for consumers, it would be interesting to see how the Indian fintech industry moves ahead.
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