Paytm raised $1 billion from existing investors including Ant Financial and SoftBank's Vision Fund at a $16 billion valuation, according to The New York Times. This follows reports from October that Paytm — a leader in India's payments market, with around 140 million monthly active users (MAU) — was close to raising $2 billion at a $16 billion valuation. Business Insider Intelligence
The firm could put this funding toward a few areas to improve its business.
New services. The company intends to invest $1.4 billion in its business over the next three years so it can add new services including insurance, lending, and stockbroking, per The NYT. Its new funding could be a part of this initiative, which could enable Paytm to derive more revenue from its users since these new financial services offerings may be more profitable than payment processing.
Reaching rural consumers. Paytm intends to use the funds to improve its offerings to rural consumers in India, per The Wall Street Journal. India's internet penetration is still growing, and rural consumers have less access than urban consumers. As more of those rural consumers come online, Paytm has the opportunity to entice them to use its services and bolster its volume. And with India's rural population making up an estimated 66% of its total population in 2018, there's likely a significant opportunity for Paytm to raise its performance by targeting the segment.
Adding $1 billion in funding may also lessen concerns about Paytm's profitability, allowing it to try to develop and expand its business instead of trying to cut costs. Paytm posted a net loss of approximately $549 million in its fiscal year (ended March 31, 2019), rising 165% annually while its revenue jumped just 5.9% annually.
The $1 billion in funding could make it easier to weather such losses, and adding new and profitable services might also help it combat losses going forward, considering Indian digital payments platform MobiKwik recently reached profitability thanks in part to its focus on financial services rather than customer acquisition for its processing business.
Paytm needs to shore up its performance because it's facing increased competition from a number of players. Paytm is competing with Google Pay and PhonePe and maybe going head-to-head with payments offering from WhatsApp soon. Paytm's large user base and involvement in various services make it a leading payments player in India, but Google Pay and PhonePe are far ahead of it in a share of transactions through the country's Unified Payments Interface (UPI), which enables mobile bank-to-bank transactions.
This makes Paytm's new funds even more important to its future success: By using them to build out quality services soon, competitors may not be able to hurt its business by leveraging their UPI volume to drive adoption of their services.
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New services. The company intends to invest $1.4 billion in its business over the next three years so it can add new services including insurance, lending, and stockbroking, per The NYT. Its new funding could be a part of this initiative, which could enable Paytm to derive more revenue from its users since these new financial services offerings may be more profitable than payment processing.
Reaching rural consumers. Paytm intends to use the funds to improve its offerings to rural consumers in India, per The Wall Street Journal. India's internet penetration is still growing, and rural consumers have less access than urban consumers. As more of those rural consumers come online, Paytm has the opportunity to entice them to use its services and bolster its volume. And with India's rural population making up an estimated 66% of its total population in 2018, there's likely a significant opportunity for Paytm to raise its performance by targeting the segment.
Adding $1 billion in funding may also lessen concerns about Paytm's profitability, allowing it to try to develop and expand its business instead of trying to cut costs. Paytm posted a net loss of approximately $549 million in its fiscal year (ended March 31, 2019), rising 165% annually while its revenue jumped just 5.9% annually.
The $1 billion in funding could make it easier to weather such losses, and adding new and profitable services might also help it combat losses going forward, considering Indian digital payments platform MobiKwik recently reached profitability thanks in part to its focus on financial services rather than customer acquisition for its processing business.
Paytm needs to shore up its performance because it's facing increased competition from a number of players. Paytm is competing with Google Pay and PhonePe and maybe going head-to-head with payments offering from WhatsApp soon. Paytm's large user base and involvement in various services make it a leading payments player in India, but Google Pay and PhonePe are far ahead of it in a share of transactions through the country's Unified Payments Interface (UPI), which enables mobile bank-to-bank transactions.
This makes Paytm's new funds even more important to its future success: By using them to build out quality services soon, competitors may not be able to hurt its business by leveraging their UPI volume to drive adoption of their services.
Want to read more stories like this one? Here's how to get access:
Sign up for Payments & Commerce skilled, Business corporate executive Intelligence's professional product suite keeping you recent on the individuals, technologies, trends, and firms shaping the longer term of consumerism, delivered to your inbox 6x a week. >> Get Started
Join thousands of prime corporations worldwide World Health Organization trust Business corporate executive Intelligence for his or her competitive analysis desires. >> Inquire About Our Enterprise Memberships
Explore related topics in more depth. >> Visit Our Report Store
Current subscribers will log in to browse the informing here.
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