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Processing charges a drag on fast-growing payments startups

Economic TimesEconomic Times · 1y ago
Processing charges a drag on fast-growing payments startups
Medial

Digital payment startups in India are facing financial challenges despite an increase in business volume. The rising operating costs, particularly payment processing charges, are impacting the profitability of these companies. The lack of Merchant Discount Rate (MDR) on Unified Payments Interface (UPI) transactions is adding to their financial woes. Startups like PhonePe, BharatPe, and Cred have seen a significant increase in payment processing charges, negating their revenue growth. Established fintech firms, such as Paytm and CCAvenue, also face similar challenges. The cost of supporting business growth and maintaining transaction settlement systems are contributing to the high operational expenses. The subsidy offered by the finance ministry to banks does not fully compensate for the losses incurred.

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Bullish on India’s UPI, neo-banking and credit growth story: Razorpay

Business TodayBusiness Today · 2y ago
Bullish on India’s UPI, neo-banking and credit growth story: Razorpay
Medial

Razorpay, a full-stack payments and banking platform for businesses, is bullish on India’s fintech story on the back of growth gems like UPI, neo-banking and credit, which happen to be its fast-growing businesses in India. “The growth of payments has been exponential in the last few years. There were 10 billion UPI payments last month and that speaks of the kind of scale we’ve achieved. There are 200-300 million Indians who are paying via UPI but we have a population of more than 1 billion. While the payments pool has expanded from 30 million people to now 300 million people, it still has some distance to go,” Shashank Kumar, Founder & Managing Director, Razorpay told Business Today.   

Phi Commerce reports Rs 100 Cr revenue in FY25, cuts losses by 45%

EntrackrEntrackr · 1m ago
Phi Commerce reports Rs 100 Cr revenue in FY25, cuts losses by 45%
Medial

Phi Commerce, a SaaS-based omnichannel payments firm, grew 28% in FY25, crossing Rs 100 crore in revenue and cutting its losses by 45% after they had doubled in FY24. Phi Commerce is a digital payments company offering omnichannel solutions across both acquiring and issuance. Its technology enables payment providers and enterprises to deliver seamless, flexible payments across online, in-store, and on-the-go channels. As an RBI-licensed Payment Aggregator, it provides a unified payments and lending suite serving B2B and B2C customers globally. For the fintech firm, commissions from GMV settlements with merchants contributed over 87% of its operating revenue, amounting to Rs 90.82 crore in FY25 and growing more than 25% compared to FY24. The remaining revenue came from technology infrastructure services and value-added payment aggregation offerings, which brought in Rs 7.36 crore and Rs 5.73 crore, respectively, in the last fiscal year. The firm earned Rs 3.9 crore in interest from fixed deposits and non-current investments, pushing its total revenue to Rs 107.8 crore. Phi Commerce’s total expenses rose 14% to Rs 133 crore in FY25 compared to Rs 117 crore in FY24. Processing charges for payments remained its largest cost component, accounting for over 57% of total expenses and holding steady at Rs 76.37 crore. Employee benefit expenses, another major cost driver, increased 18% year-on-year to Rs 32.7 crore. Additional costs, including legal and platform support fees, share-based compensation to consultants, and other overheads, added another Rs 23.9 crore. As a result, Phi Commerce’s revenue growth and tighter cost control helped the company narrow its losses by 45% to Rs 16.16 crore in FY25 compared to Rs 29.24 crore in FY24. The improvement was driven largely by a more than 25% increase in commissions from GMV settlements, while payment processing charges remained flat. On a unit level, the company spent Rs 1.28 to earn a rupee in FY25. By the end of FY25, Phi Commerce’s EBITDA margin and ROCE stood at -24.9% and -43.74%, respectively. Its total current assets stood at Rs 70.9 crore, including Rs 26.3 crore in cash and bank balances as of March 2025. According to data intelligence platform TheKredible, Pune-based Phi Commerce has raised a total of $25 million to date, including $11 million in its Series B round raised across two tranches led by BEENEXT.

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