Paytm, which has high-profile investors like SoftBank and Alibaba, on Tuesday claimed it will invest Rs 18,000-Rs 20,000 crore in its financial services business, including wallets, payments bank and e-commerce company Paytm Mall over a period of five years. “So far, in the last two years, we have already invested Rs 5,000 crore in our payment and financial services business. We plan to invest Rs 5,000 crore more to further build our financial and payments business in the next three years. In all, we would be investing anywhere in the range of Rs 18,000 – Rs 20,000 across the group, including payments, financial services and the e-commerce business,” Paytm founder and CEO of Vijay Shekhar Sharma said on the sidelines of the official launch of Paytm Payments Bank operations. Sharma added that in the current fiscal, the company has already invested about Rs 1,700 crore. It should be noted that Paytm posted a net loss of Rs 1,534 crore in the financial year ended March 2016, a rise of 312% over the previous year, according to a filing with the registrar of companies (RoC). In FY15, the firm had reported a net loss of Rs 372 crore on a revenue of Rs 336 crore.
Speaking on profitability, Sharma said that he expects the payments bank business to break even first within the next two-years of its operation. “While One97 Communications — the parent which runs Paytm wallet and the payments bank — has become contribution positive, it is still not positive at EBITDA level. The businesses are yet not positive as we continue to expand, apart from cost of investing in cloud and cost of customer acquisition,” he added. This, however, does not include the company’s earnings from its e-commerce business, operated under Paytm Mall.
Furthermore, the company claims to have 28 crore registered users. This includes customers of the payments bank. Of this, 18 crore are wallet users. Sharma further said that Paytm processes 250 crore transactions annually with a transaction value of Rs 80,000 crore. “We expect to close FY18 with a transaction value worth Rs 1 lakh crore and to grow the current merchant base from 50,000 to 60,000,” he explained. Accounts holders of Paytm Payments Bank will get to open zero-fee account (no minimum balance required), free IMPS, NEFT, RTGS, UPI transactions and access to over 1 lakh Paytm ATM locations across India. Besides, the company has also planned an investment of $500 million in KYC (Know Your Customer) operations. It is setting up KYC centres across India to complete the KYC process for customers and making them eligible for a Payments Bank account. “Paytm Payments Bank is the country’s largest mobile-first, technology-led bank.
By virtue of reaching every nook and corner of the country, we will be able to bring the large unserved and under-served population to the mainstream economy,” Paytm Payments Bank CEO Renu Satti said. Speaking at the official rollout of Paytm Payments Bank on Tuesday, finance minister Arun Jaitley said that digital transactions are fast making a dent in the predominantly cash-laden economy, thanks to a slew of government initiatives . “We had almost reconciled to the fact that the economy would be substantially informal. On its own pace, it would have taken an indefinite long time for the economy to really formalise by itself. But then several policy initiatives that the government took one after the other have set off a chain reaction,” he said.