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Building scale with sustainability

Tech, product innovation to remain a differentiator

We hosted Mr. Vijay Shekhar Sharma, Founder & CEO of Paytm, as a part of CEO Track at AGIC 2025. Here are our key insights from the session:

Profitability built on 0-MDR foundation

Paytm reiterated that its business model has been structurally designed on a 0-MDR framework, and profitability has been demonstrated even without transaction fees on UPI. Management emphasized that the model is viable, scalable, and risk-free. The 1QFY26 PAT of INR1.23b underscores that Paytm has entered a sustainable profitability phase, aided by recurring subscription revenues, AI-led efficiency, and disciplined cost controls. Retail payments now account for over 50% of transaction share, reducing cash dependency and driving long-term monetization levers.

Payments and Devices: A recurring revenue stream; innovation remains key

Merchant payments remain the core strength, with device subscriptions (Soundbox, POS) forming a recurring revenue stream similar to telecom ARPUs. Paytm highlighted that the Soundbox is not just a payment device but a platform, with a long-term target of 100m deployments. Interestingly, price sensitivity has not been a barrier, as merchants value reliability and value-added bundled services over lower pricing. The company is aiming to address UPI market share challenges and make a comeback in coming quarters (just as Chrome did for internet browsing).

Financial services: Partner-led and regulator-aligned

Paytm continues to focus on scaling financial services business through partnerships, adding new lending partners recently. The merchant loan trajectory remains strong, while Paytm Postpaid and Wallet will be relaunched in line with regulatory approval. Management stressed that fintech’s role is not to alter creditto-GDP ratios but to expand credit accessibility. Financial services will remain a critical revenue driver alongside payments, with both businesses working in tandem as acquisition funnels and monetization levers.

AI-first approach: Driving efficiency and customer stickiness

AI is being embedded across Paytm’s ecosystem, from predicting merchant churn and delinquency to improving collection bonuses and customer engagement.

Marketing spends and operating costs are being sharply reduced as AI improves targeting and interventions. Management underscored that AI is not only a cost lever but it will also enable new product innovations that Paytm will showcase in the near future, reinforcing its positioning as a regulated, AI-first technology company.

Looking ahead: Building a universal fintech platform

Paytm’s medium-term strategy rests on four pillars: (1) defending leadership in merchant payments through deeper device penetration, (2) scaling financial services in partnership with lenders, (3) leveraging AI for efficiency and innovation, and (4) exploring selective international expansion. Management reiterated its confidence that the company is now positioned not just as a payments player, but as a universal fintech platform, trusted and AI-first, with strong focus on sustainable profitability.

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