After consumers, Paytm is now offering cashback to woo merchants

Fintech giant Paytm has resumed offering cashback. This time, the money is being offered to merchants rather than consumers, as reported by The Economic Times (ET).

In the coming months, Paytm wants to onboard as many merchants as possible, giving them access to credit that they can use and expand. The selling point was the payment terminals’ competitive pricing and transaction fees, with cashback on top, people familiar with the matter said.

The way the company has designed these cash-back schemes encourages merchants to offer customers a “buy now, pay later” option or simple EMI plans for their purchases. In this way, Paytm will be able to promote consumer loans, the sources said.

“The idea is to use attractive cashback to build a relationship with merchants and eventually give them business loans and also get their customers to start using Paytm Postpaid,” a senior fintech executive said on condition of anonymity.

This plan aligns with Paytm’s larger goal: to dominate the offline payments market and use the channel to attract new customers for credit.

According to Paytm, around eight million merchants use its payment solutions and it has around 92 million monthly active users.

The people cited above also claim that it intends to control both channels of the merchant’s payment system.

It could then extend credit to these merchants, sell other financial services, and generate enough income from base payments to support its top line, they added.

In a sense, offline is the company’s only avenue for new business at the moment, as the Reserve Bank of India has halted Paytm’s online merchant acquisition business due to issues with its payment aggregator license enforcement.