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Informist, Tuesday, May 6, 2025

By Sachi Pandey 

MUMBAI – One 97 Communications Ltd., parent of digital payments platform Paytm, is reshaping its business model to prioritise merchant services and automation, the company's management said in its post-earnings analyst call Tuesday. The company expects low unified payments interface acquiring incentives to persist, especially once merchant discount rates are introduced. "I think that is the way we are running the business is that we expect UPI incentive to remain low going forward, especially once the MDR (merchant discount rate) comes in," the management said.

As of Mar. 31, the company had received UPI acquiring incentives of INR 700 million. "UPI incentive revenue was lower this year on account of lower incentive from the Government," the company said in its earnings statement. 

The company's near-term strategy is centred on merchant growth to drive revenue and profitability over the next two years. In the March quarter, merchant loans rose to INR 43.15 billion from INR 38.31 billion in the previous quarter.

One 97 Communications also aims to expand its platform to 200–250 million users, focusing on engagement rather than market share. Management said it will prioritise product and technology investments over marketing to attract users. The number of key financial services users fell to 550,000 as of Mar. 31 from 590,000 a quarter earlier.

Going forward, the company expects growth in the secured loan book to support the personal loan segment. It sees easing credit conditions positive for both personal and credit card portfolios. For Jan-Mar, personal loan disbursals fell to INR 14.22 billion from INR 17.46 billion in the previous quarter.

To improve profitability, the company is working to raise payment processing margins across different instruments and merchant categories. "Our effort is to continue to improve payment processing margin across instruments and across merchant types, and then payment processing costs sort of takes care of itself," the management said. Revenue from payment services rose 4% on quarter to INR 10.46 billion, while net payment margin, including UPI incentive, stood at INR 5.78 billion as of Mar. 31.

One 97 also plans to control employee costs by pausing new hiring and not replacing staff exits. Management said automation is driving productivity gains and will gradually reduce staffing costs. "We are not replacing the positions that get emptied. We will be not recruiting, incrementally if somebody goes out," the management said. 

For the quarter ended March, One 97's consolidated net loss widened to INR 5.40 billion from INR 2.10 billion in the previous quarter. The loss was mainly due to exceptional costs, including INR 4.92 billion for accelerated employee stock ownership and INR 300 million related to a subsidiary impairment. 

On Tuesday, shares of company closed nearly 6% lower at INR 814.85 on the National Stock Exchange.  End

Edited by Deepshikha Bhardwaj

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