Hello everyone,   

Welcome to the 113th edition of The Pattern, a weekly newsletter where we dive into the latest from the world of finance, economy and technology. Let’s get started.   

It’s barely an exaggeration to say that UPI is every Indian’s pride. Bureaucrats want to take credit for it, NRIs are mighty impressed by it, and most citizens with a smartphone swear by it. It's also the banking sector’s favorite success story, often a yardstick to measure how far the industry has come. And here I am — another citizen-fintech buff-and-speculator — talking about UPI, yet again! This time, in the context of redemption for a fintech player that has been on bumpy ride for months now: Paytm.  

There’s been quite the buzz about the fintech giant since RBI’s barring of Paytm Payments Banks’ services earlier this year. Paytm has been braving the storm — through plummeting share value , managerial disruptions , and the threat of losing its customers to competitors . So, when the reports of widening losses and dip in revenue were reported in Q4, it didn’t quite come as a surprise. 

But this week, the perception of stormy clouds seems to have made way for a ray of hope for the fintech player. An InGovern report stated that Paytm’s FY2023-24 results show “resilience and growth” . Here’s an excerpt from the report:  

“Given the regulatory action on its associate entity, the disruption seen in Q4 FY24 is lower than expected. Paytm’s ability to retain 76% of its monthly transacting users (MTU) and hold over 90% of its subscription merchant base, demonstrates the strong loyalty towards the brand and stability of its platform.”  

The report highlighted several “core positives” to back their claim on the company’s resilience. Two of the more noteworthy ones being their business in loan distribution and payments services respectively. While the former is a sure-shot route that has proven time and again to add to revenue business books, the mention of Paytm’s payments services to me was interesting. The report highlighted that Paytm’s payment services revenue grew by 26% YoY to Rs. 6,235 crores in FY24.  

This led me to wonder: Could UPI play a crucial role in Paytm’s road to recovery?  Turns out, it just might! And the folks at Paytm seem to think so too. The company has previously stated that they will be focusing on UPI, along with debit and credit card processing, for a strong payments services growth. There are numbers to back this up too. UPI now accounts for ~80-85% of Paytm’s total Gross Merchandise Value, up from 70% in the previous year.

Furthermore, UPI incentives helped the fintech add INR 288 crore to their revenue in Q4FY24, an increase from INR 182 crore received in Q4FY23. And while Paytm may have lost some of its market share in UPI payments space, InGovern’s  optimism and has me sold on Paytm’s recovery in UPI payments too.  

As for UPI, it seems to be a gift that keeps on giving! This brilliant piece of DPI is more than just a safe bet to have in a financial service’s product mix. And in Paytm’s case, it happens to be the lifeboat that may get them back on top of their fintech game in no time.  Looks like UPI has proved yet again why it’s India's fintech darling! 

That's all from me this week — leaving you with some numbers and reading recommendations.  

Between the digits: 

• USD 4.1 billion: Funding received by start-ups in India from January to May in 2024  

• USD 630 million: Funding received by Indian fintechs between January to May in 2024  

• USD 3 billion: The amount State Bank of India is aims to raise through debt in FY2025   Reading list: 

• UPI integration gives a fillip to RuPay credit cards distribution  

• Winning the modern lending game with omni-channel lending   How much do Indian

• FinTechs spend on compliance?    

Thank you for reading. If you liked this edition, forward it to your friends, peers, and colleagues. You can also connect with me on Twitter here and follow FinBox on LinkedIn to always get all updates.

Cheers,

Mayank