Digital payments battle costs companies $900 million in loss

The fight for dominance in digital payments has caused a collective loss of nearly $900 million (Rs 6,500 crore) for Paytm, PhonePe and Amazon’s payments unit in India for the year ended March 2020. Two of these firms reduced cashbacks, but marketing & promotional spends and other costs remained high.

The total loss for the three units translates to around Rs 18 crore per day. Compared to the financial year ended March 2019, the cumulative loss has gone down by 9-10%, but it is still more than double the loss in fiscal year 2018 (Rs 2,729 crore).

Data for PhonePe sourced from business intelligence platform Tofler shows the Bengaluru-based company’s revenue rose by 73% to Rs 427 crore in 2019-20, while losses declined by 7% to Rs 1,771 crore. PhonePe’s losses had more than doubled in the year before as it spent heavily on cashback rewards.