How Paytm is losing money?

Paytm is an Indian financial technology company and an online payment system. Its headquarters is situated in Noida, India. It was founded in August 2010, 9 years ago and is a worldwide online payment website. Vijay Shekhar Sharma is the founder of this company and is the CEO of the company. The company offers various services like payment of utility bills, booking of travel, movies and events, payment at fruit shops, grocery stores, etc. through Paytm QR code. The company was started as a prepaid mobile recharge platform and then postpaid mobile bills and landline payments in 2013. Later on, in January 2014, Paytm launched its Paytm wallet. Then Uber and Indian Railways added the Paytm wallet as an option for their online payments. In this way, the company proceeds its journey towards success.

Paytm Loss

Paytm money is reported at a loss every year. It is observed that the other third-party processors are offering discount offers that the Paytm, therefore, it is offering a burden top its users. One97 which is the parent company pf Paytm has reported that there is a net loss of about Rs. 4217.20 crore for the financial year of 2018 – 19. And this loss is almost thrice higher than the loss of the previous year. According to the annual report of the company, the loss of the previous financial year was Rs. 1604.34 crore. Another research shows that the losses of Paytm have been widened by 165% than the last year while the revenue of the company is increasing at a very high rate. One97 Communications has posted that at the end of March 31, 2019, the company has faced a loss of Rs. 3959.6 crore compared to Rs. 1490 crore for the same period for the previous year. The standalone revenue of the company is standing at Rs. 3319 crores recently but these were Rs. 3229 crores in the ear of 2017 – 18. In FY19, the company has reported a net loss of Rs. 36.8 crore. A new website Bloomberg Quint firstly reported the financial status of the Paytm. Paytm company was investing in about $1 billion each year to cover the loss of the company and to expand the online payment system of the country. The latest information shared by the company showed that the company has recorded about 1.2 billion transactions in the first three months of this year, and it has been made possible by 14 million retails stores in different locations.

How Paytm is losing money?

The online payment company Paytm is going to lose more in every year. This is due to many reasons. Some of them are listed;

Competition among different Companies:

There are many third-party processors which are offering the online transaction internationally. Therefore, competition among these companies is very strong. Some of the third-party vendors are offering more discounts to their users than the Paytm. Therefore, the users are moving to other companies from where they get more benefits. Due to the interaction of users to other companies, the online transactions through Paytm is reducing greatly which is one of the major causes of loss of the Paytm.

High Transaction Rates:

Due to the high transaction rates of Paytm than other offering companies and some problems in the bank licensing the loss of the Paytm is increasing every second. Also, other bank fees charged by the users and their cash backs to use in Paytm are the major cause of the loss of Paytm

How to overcome the Loss?

There occur profits and losses in business matters. Paytm is trying to overcome its losses. As the expenses of the company are also increasing day by day which is also a major cause of the increase in the annual loss. However, the company has announced to launch a major drive for educating its users of scanning of QR code at different outlets through their Paytm app for instant payments as most of the people usually are unaware of these things. Also, the company is focusing on peer to peer transactions for online payments at restaurants, commutes, and other daily spends. This will enhance the number of online transactions and will help reduce the annual loses of the Paytm.

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