Paytm Shifts Focus Between Payments and Lending Amidst Regulatory Changes

Indian fintech giant Paytm is once again exploring payment services as a primary growth engine, as new regulations could reshape its revenue streams.

The company, which began as a digital wallet and expanded into payments, had shifted its emphasis to lending and credit product distribution two years ago. This transition was instrumental in reviving profitability following regulatory challenges in early 2024.

In FY21, payment services accounted for 71% of Paytm's revenue. By FY26, loan distribution had grown substantially, comprising 31% of the total revenue, while payment services remained the largest segment at 58%. Recent financial reports indicate net profitability and continued revenue growth.

Paytm has previously scaled back its "super app" ambitions to concentrate on core operations. Growth is now driven by both active users and merchants, with artificial intelligence expected to play a key role going forward.

The company's payments business maintains a strong merchant focus, offering solutions like "Soundbox" devices. Despite the absence of direct fees on UPI transactions, Paytm leverages its merchant network for revenues from loans, insurance, and device subscriptions. In the latest quarter, merchant GMV increased by 31%, and payment services revenue grew by 33%.