Monday, 27 March 2023

Paytm Wins RBI Extension for Payment Aggregator Licence Application: Details

Indian financial technology company Paytm Payments Services has received an extension from the country's banking regulator to apply for a payment aggregator licence and aims to reapply in about 15 days, the company said on Sunday.

Paytm Payments Services, in the meantime, can continue with the online payment aggregation business for its existing partners, without taking on any new merchants, the company said in a notification to stock exchanges on Sunday.

Paytm Payments Services is a wholly owned subsidiary of One 97 Communications.

Payment aggregators, platforms that bring together various online payment options, must be licensed by India's central bank and banking regulator, Reserve Bank of India.

In November, India's banking regulator had declined a payment aggregator licence for the One 97 Communications unit that owns the popular Paytm brand.

The company said that the latest move has no material impact on its business and revenue and for the offline part of the business, the company can continue to take on new merchants and offer them payment services.

Last month, Paytm said EBITDA (earnings before interest, taxes, depreciation, and amortisation), an indicator of operational profit, before ESOP cost margin improved to Rs. 31 crore during the third quarter ended December 31, 2022.

The company has calculated an incentive of Rs. 130 crore from UPI transactions in three quarters but CEO Vijay Shekhar Sharma said that the incentive may technically make the fourth quarter a free cash flow positive quarter but Paytm will report as a one-time item.

"UPI incentive will be one-off and we will explicitly call out as one-off. Rs. 130 crore that we are quoting is for three quarters. The fourth quarter number will be topped on top of it. Because we are calling it one-time item, we are not calling it free cash flow generative. We would rather say free cash flow generative when we are consistently sure of it," Sharma said during the earnings call in February.


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