Paytm grows global footprint, opens outposts in UAE, Saudi, Singapore

Paytm is growing its global footprint by opening subsidiaries in the United Arab Emirates (UAE), Saudi Arabia and Singapore, One97 Communications Ltd, the parent of the fintech firm, said.

At a meeting held on 20 January, the board of One97 Communications’ wholly owned unit Paytm Cloud Technologies Ltd okayed the incorporation of subsidiaries in the UAE, Saudi Arabia and Singapore.

“We believe that our technology-led merchant payments and financial services distribution business model in India has the potential for expansion in similar international markets,” the company said in its earnings release on Monday.

“We have developed a portfolio of innovative hardware, software and services stack in India, which can be deployed and monetized internationally. We are exploring various approaches including organic expansion/local licenses, strategic investment and partnerships,” it added.

In an earnings call, Paytm chief executive officer Vijay Shekhar Sharma said merchant acquisition and payment facilitation in the new markets are growth opportunities for the company.

“The intent here is to first go on the merchant side, as it is a long-term business model. In every economy and geography, senior executives in either the central banks of the governments loved it,” Sharma said.

“SME (small business) credit is missing everywhere. So, if you can solve for payment and for future forward receivable, that model is a template. Technology-wise and capability-wise we have demonstrated at scale. So that will be primarily our plan,” he added.

The opportunity is, however, “very, very far ahead, and should not be misunderstood that it (revenues) will show up in a quarter or two,” Sharma clarified.

Setting up a subsidiary has a long lead time, and may take about six months, according to the company.

“From setting up a subsidiary to in some case getting licenses, and eventually launching products before merchants sign up and followed by revenue and profit generation,” president and chief financial officer Madhur Deora said.

“These are largely business-to-business opportunities and don’t have a large upfront spend. To begin with, Paytm is investing up to Rs20 crore,” Deora added.

Paytm, with subsidiaries across the Middle East, Southeast Asia, South Asia, and Africa offering marketing services to telecom operators, plans to rationalize and reduce these subsidiaries over the next six months, the company said.

On Monday, One97 Communications reported a 35.8% drop in year-on-year decline in operating revenue in the October-to-December quarter, while net loss narrowed marginally to Rs208 crore.