India’s digital payments space has been on a tear for the past few years. Users and transactions have been climbing rapidly. Generating revenue, however, has been a stubborn challenge for startups.

To keep users coming back, they have relied on discounts and cashbacks, which hurt toplines. Not to mention, the approach is unsustainable. Players such as PhonePe, Paytm and BharatPe have introduced allied financial services (lending, insurance, etc) to net some cash.

Better days ahead: Now, as the sector shows signs of stability and companies find their sweet spots, the core payments business itself is producing healthy revenue. The FY22 financials reported by listed payments banks Paytm and Fino confirm this.