Payments Vs Lending: The Tale Of Paytm’s Two Engines 

The last two years for Paytm have been about distribution of financial services, and now the company finds itself at a crossroads as the MDR rules for UPI could turn its focus back to  payments 

The timing is important because Paytm's profitability in FY26 marks a shift from its sprawling super app strategy towards a more concerted approach on monetising the existing user base

Interestingly, founder and CEO Sharma said Paytm shareholders can expect to see AI revenue reflected in disclosures by FY28, setting up an intriguing next 15 months for the company

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Paytm began as a digital wallet, became a payments behemoth on the back of that and then built up the momentum with UPI. But two years ago it had to slow it all down and become a lending company. turn to profitability and the revival of topline after the Paytm Payments Bank bruising was down to this transition from payments to loans and distribution of credit products.  

But now, the company finds itself at another crossroads as the MDR rules for UPI could once again turn Paytm towards payments as a growth engine. How will that change the fintech platform’s revenue structure and how does the major focus on artificial intelligence (AI) play a role in this?   

Five years ago, Paytm was almost entirely a payments company. Payment services brought in ₹1,981 Cr of its ₹2,802 Cr operating revenue in FY21, about 71%. Financial services distribution contributed just ₹128 Cr, under 5%. That mix has since been turned on its head. According to the company’s FY26 annual report, financial services distribution, mostly loan distribution, grew at an 83% CAGR to ₹2,594 Cr, more than 20X its FY21 base. It now makes up 31% of the ₹8,437 Cr topline. 

Payment services is still the largest piece at 58%, but grew at a much slower 19% CAGR over the same period. 

More importantly, in FY26, the company reported a net profit of ₹552 Cr against a ₹663 Cr loss in FY25. In Q1 FY27, operating revenue rose 28% to........

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