‘Paytm banks on cashbacks, not services’

Veteran banker Aditya Puri has raised questions about Paytm’s business model, saying the recently listed financial services company has earned customers not by rendering services but by way of cashbacks.

Puri, who led HDFC Bank from inception and made it into the largest in the private sector space by the time he retired in 2020, further questioned Paytm’s model, wondering where are the profits if the company manages so much of payments. The remarks come amid a steep decline in Paytm’s shares, which are now trading 75 per cent lower than the price at which investors bought them at the initial public offering.

This is not the first time that Puri has gone public with his concerns on the models of such companies.

“Paytm… he makes payments, when did he make profit,” Puri asked, speaking at an event organised by the IMC Chamber of Commerce at the University of Mumbai.

Puri said unlike a bank, which books revenues for offering its services and reports profit, Paytm has garnered its millions of customers by offering cashbacks. Stressing on the hardwork involved in aspects like cross-selling, Puri said years of work had to go in before HDFC Bank could increase its cross-selling capabilities in the auto loans segment despite owning the customers by virtue of offering them other services.