The world of unsecured lending has received a jolt due to COVID-19. Most of the companies are struggling to keep up the revenue due to low demand in the market. The low demand and falling revenue have forced companies to retort to the sacking of employees to cut down the expenses. This has put an overcast over the prospect of lending companies as to whether they will able to recover interest and the principal of loans from these employees. The answer to this question will become clear once the 6 months of moratorium gets over. This has made lending companies shying away in giving credit at this present time due to stress in the various consumer sector.
In the meanwhile, we heard in the streets that Paytm is looking to foray into giving small credits to buyers for the purchase of grocery and retail goods. Paytm has tied up with Clix Capital and Arthimpact for loan disbursement. The credit could be up to 1 lakh for esteem customer. The facility will be initially open for most active Paytm users. The past usage data of the client will help Paytm in assigning different credit. Paytm has tied up with thousands of neighbors store owners, and retail outlets to deliver the items on a credit basis.
The Paytm over the years has faced extreme competition from Google Pay, and Phone Pay in payment apps categories. The UPI introduced in 2017 has completely removed wallet concept of Paytm from the scene. Google Pay and Phone Pay have used UPI in their favor and have earned big market share. Paytm late entry in UPI has made it a laggard in gaining the market share. We all know the credit card business is having an excellent model and if this becomes a hit for Paytm, the lost glory can be achieved again.
However, the path would not be so easy, the Watspp Payment app which can hit India anytime would be a huge hurdle for Paytm. Watsapp through FB has already tied up with Reliance Retail to order grocery from the app and they will also give credit similar to what Paytm is looking into. So. next 1-2 years would be make and break for Paytm and for its investors. Can management prowess of Vijay Shekhar able to compete with likes of Walmart, Google and FB would be an interesting battle to watch out.