Paytm strengthens merchant payments leadership, with its AI-Powered full-stack platform driving profitable growth

New Delhi [India], July 29 (ANI): The payments and financial services distribution company, Paytm, which announced its profitability in the first fiscal quarter, also reinforced its leadership in the merchant payments ecosystem, through its differentiated full-stack payments technology offerings that empower micro, small, and medium-sized enterprises (MSMEs) and enterprises.
Being the only merchant platform, providing seamless end-to-end solutions across hardware, software, and services, Paytm has deepened adoption of its payments technology stack in Tier 2 and Tier 3 cities in India.
As a result, in June 2025, Paytm had 1.30 crore subscription-paying merchants, the highest in its history.
The Noida-based payments major now expects that over 10 crore merchants will accept digital payments and 40-50 per cent of these merchants will need subscription services, underscoring its confidence towards further monetisation and market dominance.
As per the company statement, Paytm holds a leading position in serving enterprise merchants with its online payment gateway and All-in-One POS (point-of-sale machines), which supports all payment methods with industry-leading success rates.
The company continues to pioneer and scale innovations such as the Card Soundbox and Dynamic QR to fill market gaps, further boosting merchant monetisation through affordability solutions like EMI and commerce services including advertising and deals on the Paytm app.
The devices are supported by a large on-ground service network and Paytm's omni-channel platform, enabling seamless merchant onboarding, lifecycle management, and customer support.
The company has also been an aggressive early adopter of Artificial Intelligence (AI), which has also led it to provide superior offerings in the market. For instance, Paytm's internal AI platforms, Paytm ARMS (for merchant lifecycle insights) and Paytm Pi (for fraud and risk detection), are enabling the company to onboard, segment, and price merchant services efficiently at scale.
These tools have allowed Paytm to automate key business workflows like onboarding, churn prediction, and credit profiling, significantly reducing operational costs.
This led to a 28 per cent YoY reduction in non-sales employee costs, further improving profitability without compromising merchant service levels. It is also leveraging AI during merchant onboarding, improving checks and leading to high quality device merchants.
Madhur Deora, Group CFO and President, Paytm, emphasized during the Q1 FY26 earnings call, "Merchant payments remain the core of our business, and we're committed to driving continued innovation and growth. In financial services, merchant lending has seen strong tailwinds and we've got the business model right. We're confident that every product and internal process at Paytm will be AI-first."
The company's high-retention ecosystem, powered by both hardware and software integration, has proven successful in converting device penetration into a self-sustaining merchant flywheel. This stickiness also reflects in Paytm's growing financial services and credit distribution to merchants, a segment showing rising repeat usage.
In Q1 FY 2026, distribution of financial services revenue grew 100 per cent year-on-year for the fintech major to Rs 561 Cr, driven by continued expansion in merchant loans.
According to the company, its subscription model strengthens merchant stickiness and also ensures predictable, recurring revenue.
Paytm's merchant-driven model culminated in a Profit After Tax (PAT) of Rs 123 crore in Q1 FY26, its first fully profitable quarter.
The company also reported an operating revenue of Rs 1,918 crore, up 28 per cent YoY and contribution profit of Rs 1,151 crore, up 52 per cent YoY, with a 60 per cent margin.
It reported an EBITDA of Rs 72 crore, turning positive with a 4 per cent margin. These numbers validate the scalability and efficiency of its merchant model. (ANI)