Indian digital payments giant Paytm Money has launched futures and options trading

On February 25th, Indian digital payment giant Paytm Money recently launched futures and options trading.

Varun Sridhar, chief executive of Paytm Money, said the feature, which can be accessed through its App and website, has already received more than 100,000 applications.

For the layman retail investor, futures and options trading means buying at a predetermined price at a later date.

It is worth noting that Indian financial services firms Zerodha, Upstox and Groww typically charge a fee of Rs 20 for futures and options trades. Paytm Money charges only Rs 10 for futures and options trading, it said. More than 50 percent of applications come from second- and third-tier cities, and only a handful of retail investors rely on trading futures and options, said Varun Sridhar.

Satish Meena, a financial forecasting analyst, said retail investors usually do not make short-term bets because of the risks involved in options and futures trading, and he was not sure whether the launch of the feature would lead to significant growth for Paytm Money.

But there is no denying that the introduction of new features will make Paytm Money a more comprehensive investment platform. In addition to investments, the platform supports investments in digital gold, mutual funds and NPS pension funds.

According to the data, Paytm Money’s total expenditure in FY2020 increased two-and-a-half times to Rs 946.4 crore. The company suffered a loss of Rs 924.1 crore in the fiscal year ending March 2020 as it ramped up recruitment and nearly 68 per cent of its expenditure went to staff compensation.

It comes after people familiar with the matter said Chinese fintech giant Ant Group is considering selling its 30 percent stake in Paytm, India’s digital payment platform. However, the exact details of the deal have yet to be determined and the formal sale process has yet to start. It is worth mentioning that Paytm is backed by Japan’s Softbank Group. Paytm’s company was valued at USD 16 billion in the last round of private equity last year. In this valuation, Ant’s stake in Paytm is worth about 4.8 billion dollars. Increased competition in the payments sector may be another factor in Ant Group’s consideration of exiting Paytm apart from the Indian government’s stricter investment rules for Chinese companies, it is understood.

Paytm Money, paytm’s wealth management platform, reported last month that Paytm would soon set up a new company, Paytm Payments Gateway Service Pvt Ltd, to run its payment gateway business with a deposited capital of Rs 1 billion.

India’s equity and derivatives trading sector has been monopolized by companies such as Zerodha, Upstox and ICICI Securities, India’s industrial credit investment bank. As of January 31, 2020, there were 3.142 million active users on the Zerodha platform, 1.852 million active users on Upstox, and 1.347 million active users on ICICI Securities, according to data from the National Stock Exchange of India (NSE).

Paytm Money isn’t yet among the top three brokerage apps in terms of transaction volume, but under the leadership of Varun Sridhar, the company is increasingly diversifying its product offerings to compete with those companies and other wealth management platforms.