Paytm: Paytm lending decoded: Where does it stand after slowdown in small-ticket credit?
In December 2023, fintech major Paytm announced that it will start scaling down one of its most popular credit products Paytm Postpaid, a buy-now-pay-later (BNPL) offering for retail users. The fintech’s stock prices tumbled as much as 20% the day after the announcement.
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The impact of the move on Paytm’s business became evident in the company’s December quarter financials reported on January 19.
For the first time at least since listing, when it started providing data on loan distribution, the company reported a fall in the value of loans disbursed to Rs 15,535 crore against Rs 16,211 crore in the September quarter. It also distributed fewer number of loans at 1.15 crore compared to 1.32 crore in the previous quarter.
For the Noida-based payments major, credit is an important cornerstone of its business. So, how is the slowdown in consumer lending playing out on its overall gameplan? ETtech decodes.
Shifting focus towards larger ticket size loans
As Paytm slows down its focus on sub-Rs 50,000 credit, it is looking to scale up large-ticket loans on its platform. The company on Friday said that it started piloting this product in the September quarter of the current fiscal with over 20 million users already white-listed.
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With two lending partners, it distributed Rs 490 crore worth of these loans in the December quarter. Paytm is also looking to add three to four lending partners for its high-ticket loans vertical by the first quarter of FY25.Also read | Unsecured loans in focus, fintechs see NBFC credit taps drying up
Postpaid scaled down
The scale-down of its Postpaid business was pretty sharp. According to data shared by the company, Postpaid loan distribution in December fell by 50-60%. The total value of Postpaid loan distribution fell 17% sequentially to Rs 7,496 crore in the third quarter from Rs 9,010 crore in the second quarter. This is expected to further be calibrated in the coming months.
According to Paytm, the number of eligible Postpaid users has been slashed by roughly 15%. Almost 3.7% of its 100 million monthly transacting users on the platform have access to Postpaid loans on Paytm, as it uses the product to upsell higher ticket loans to users.
With Postpaid loans being almost 50% of the total quarterly loan disbursal value for Paytm, it is imperative for the company to scale other credit verticals fast to maintain business momentum.
Company president and chief operating officer Bhavesh Gupta told analysts on Saturday that the scale-down on Postpaid loans is likely to continue in the fourth quarter and may stabilise by the first quarter of FY25.
Also read | ETtech Exclusive: Paytm lays off over 1,000 across units amid cost-cutting
Impact on financial services revenue from credit business
Revenue growth from financial services distribution showed a slowdown with only 6% growth in the third quarter, compared to 9% in the second. It stood at Rs 607 crore for the December quarter vis-a-vis Rs 571 crore for the September quarter.
Overall value of loan disbursals on Paytm has seen a slide for the first time in years during the third quarter, with its decision to curtail small-ticket credit. The total value of loans disbursed on the platform was down 4% sequentially to Rs 15,535 crore in the December quarter.
Personal loan ticket sizes go up
Now, as it scales down Postpaid loans, its personal loans distribution vertical has seen a boost. Total value of personal loans increased 12.2% sequentially to Rs 4,460 crore in the December quarter.
Average ticket size has increased to Rs 1,68,000 from Rs 1,20,000 a year ago, with average tenure increasing to 16 months versus 15 months a year ago, it said.
Penetration for personal loans is at 1.1% of Paytm’s monthly transacting users.
Also read | ZestMoney saga highlights drying NBFC credit flow
Merchant loans business growth continues
Merchant loans, which is another important credit vertical, saw a 9% sequential growth in loan value to Rs 3,579 crore in the December quarter.
Average ticket size for merchant loans increased to Rs 2,00,000 from Rs 1,50,000 a year ago, with average tenure of 13 months versus 12 months last year.
However, it will have to scale its devices business, amidst heavy competition, to ensure that its merchant loans business shows healthy growth.
In December 2023, fintech major Paytm announced that it will start scaling down one of its most popular credit products Paytm Postpaid, a buy-now-pay-later (BNPL) offering for retail users. The fintech’s stock prices tumbled as much as 20% the day after the announcement.
![]()
The impact of the move on Paytm’s business became evident in the company’s December quarter financials reported on January 19.
For the first time at least since listing, when it started providing data on loan distribution, the company reported a fall in the value of loans disbursed to Rs 15,535 crore against Rs 16,211 crore in the September quarter. It also distributed fewer number of loans at 1.15 crore compared to 1.32 crore in the previous quarter.
For the Noida-based payments major, credit is an important cornerstone of its business. So, how is the slowdown in consumer lending playing out on its overall gameplan? ETtech decodes.
Shifting focus towards larger ticket size loans
As Paytm slows down its focus on sub-Rs 50,000 credit, it is looking to scale up large-ticket loans on its platform. The company on Friday said that it started piloting this product in the September quarter of the current fiscal with over 20 million users already white-listed.
Discover the stories of your interest
With two lending partners, it distributed Rs 490 crore worth of these loans in the December quarter. Paytm is also looking to add three to four lending partners for its high-ticket loans vertical by the first quarter of FY25.Also read | Unsecured loans in focus, fintechs see NBFC credit taps drying up
Postpaid scaled down
The scale-down of its Postpaid business was pretty sharp. According to data shared by the company, Postpaid loan distribution in December fell by 50-60%. The total value of Postpaid loan distribution fell 17% sequentially to Rs 7,496 crore in the third quarter from Rs 9,010 crore in the second quarter. This is expected to further be calibrated in the coming months.
According to Paytm, the number of eligible Postpaid users has been slashed by roughly 15%. Almost 3.7% of its 100 million monthly transacting users on the platform have access to Postpaid loans on Paytm, as it uses the product to upsell higher ticket loans to users.
With Postpaid loans being almost 50% of the total quarterly loan disbursal value for Paytm, it is imperative for the company to scale other credit verticals fast to maintain business momentum.
Company president and chief operating officer Bhavesh Gupta told analysts on Saturday that the scale-down on Postpaid loans is likely to continue in the fourth quarter and may stabilise by the first quarter of FY25.
Also read | ETtech Exclusive: Paytm lays off over 1,000 across units amid cost-cutting
Impact on financial services revenue from credit business
Revenue growth from financial services distribution showed a slowdown with only 6% growth in the third quarter, compared to 9% in the second. It stood at Rs 607 crore for the December quarter vis-a-vis Rs 571 crore for the September quarter.
Overall value of loan disbursals on Paytm has seen a slide for the first time in years during the third quarter, with its decision to curtail small-ticket credit. The total value of loans disbursed on the platform was down 4% sequentially to Rs 15,535 crore in the December quarter.
Personal loan ticket sizes go up
Now, as it scales down Postpaid loans, its personal loans distribution vertical has seen a boost. Total value of personal loans increased 12.2% sequentially to Rs 4,460 crore in the December quarter.
Average ticket size has increased to Rs 1,68,000 from Rs 1,20,000 a year ago, with average tenure increasing to 16 months versus 15 months a year ago, it said.
Penetration for personal loans is at 1.1% of Paytm’s monthly transacting users.
Also read | ZestMoney saga highlights drying NBFC credit flow
Merchant loans business growth continues
Merchant loans, which is another important credit vertical, saw a 9% sequential growth in loan value to Rs 3,579 crore in the December quarter.
Average ticket size for merchant loans increased to Rs 2,00,000 from Rs 1,50,000 a year ago, with average tenure of 13 months versus 12 months last year.
However, it will have to scale its devices business, amidst heavy competition, to ensure that its merchant loans business shows healthy growth.
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