Paytm 2.0: Betting Big on Postpaid, Payments and AI to Script Its Next Chapter

After a turbulent year that saw its banking arm under the regulatory scanner, fintech startup Paytm finally seems to be steering out of rough waters. The company, once at the center of India’s fintech storm, is now quietly scripting its next big chapter — one that revolves around three powerful levers: Postpaid 2.0, payments expansion, and artificial intelligence.

Paytm 2.0: From Setback to Stability

When the Reserve Bank of India tightened its grip on Paytm Payments Bank in 2024, it looked like a major blow to the fintech behemoth’s ambitions. Revenues slowed, losses piled up, and critics wondered if the company could ever recover from the shock.

Fast forward to 2025 — the story looks very different.

In FY26, Paytm finally reported its first operationally profitable quarter, marking a significant turnaround. Even in the September 2025 quarter, the company managed to stay profitable — a rare achievement in India’s fiercely competitive fintech space.

Yes, the profits fell sharply — down 98% year-on-year and 83% sequentially to ₹21 crore — but that drop had more to do with the ₹2,048 crore sale of Paytm Insider last year, not operational weakness.

Had it not been for the regulatory turbulence in India’s real money gaming (RMG) sector and a ₹190 crore loan write-off to its RMG venture First Games, the company’s bottom line might have told an even stronger story. Excluding that one-off, profits could have jumped nearly 80% quarter-on-quarter to ₹221 crore.

What truly stands out, however, is that Paytm’s revenues have been steadily growing — a sign that its core business engine is humming again. The company’s operating revenue rose 24% year-on-year and 7% quarter-on-quarter to ₹2,061 crore in Q2 FY26.

A Shift in Strategy: From Cost Cutting to Growth Mode

For the longest time, Paytm’s leadership was laser-focused on controlling costs and stabilising operations. Now, that chapter seems to be closing.

“We are now shifting focus from profitability to growth,” CEO Vijay Shekhar Sharma said during the company’s Q2 earnings call.

The new playbook? Strengthen the topline through merchant expansion, credit innovation, and AI monetisation.

And right at the heart of this next phase lies Paytm Postpaid 2.0 — the company’s reimagined credit product designed to make short-term loans more accessible and flexible.

Paytm Postpaid 2.0: The Comeback of Credit-on-UPI

After shelving its “Buy Now Pay Later” (BNPL) product last year, Paytm brought back its credit offering in September — this time with a twist.

Now dubbed Paytm Postpaid on UPI, the service allows select users to use a credit line directly through UPI rather than traditional credit cards.

This subtle yet powerful shift means broader merchant acceptance and seamless integration into India’s everyday payment habits.

Vijay Shekhar Sharma calls it a “consumption credit” product — not your typical EMI-based loan. The idea is simple: users can access small-ticket loans of up to ₹50,000–₹60,000 per month and repay them within 30 days.

“It’s not for buying an iPhone on EMI,” Sharma explained. “It’s for managing monthly expenses — offering a credit line that matches spending needs and resets every month.”

Depending on a user’s credit profile, some may get 0% short-term credit, while others may pay a 1–2% fee — making it a fee-based model instead of a traditional lending product.

This move aligns with Paytm’s larger ambition to monetise its massive payments user base, without getting caught in a race for UPI dominance.

“We don’t have the largest user base, but our customers are of higher quality,” Sharma said, adding that the company plans to enhance this base by adding AI-driven wealth and disbursement products over time.

Credit & Financial Services: Back in Growth Gear

Paytm’s financial services vertical, which includes lending and credit distribution, saw a massive 63% jump in revenue to ₹611 crore in Q2 FY26 — up from ₹376 crore a year ago.

While the company didn’t break down loan disbursement figures, Sharma confirmed that merchant loans continue to grow — both in terms of volumes and revenue.

This growth trajectory underscores Paytm’s evolving identity: from being a payments player to becoming a credit-driven financial ecosystem.

Doubling Down on Payments: The Core Engine

At its core, Paytm remains a payments company, and that engine is now revving up again.

Just days before its Q2 earnings, the company announced a ₹2,250 crore investment into Paytm Payment Services Limited (PPSL) — through a rights issue approved earlier this year.

The fresh capital will help strengthen PPSL’s balance sheet, fund the acquisition of its offline merchant payment businesses, and support working capital needs.

In Q2, Paytm’s payment processing revenue jumped 27% YoY to ₹594 crore, and merchant subscriptions grew to 1.37 crore, up from 1.12 crore a year ago.

CFO Madhur Deora explained the new thrust, “We want to dominate in the merchant ecosystem — especially among small offline merchants. That’s where the next wave of growth lies.”

The investment will also fuel Paytm’s on-ground sales expansion, helping it roll out credit and EMI products tailored for small businesses.

Beyond India, Paytm’s global vision is slowly taking shape too. It’s expanding selectively in Southeast Asia, and recently introduced a feature that allows NRIs across 12 countries — including the US, UK, and UAE — to make UPI payments via international numbers.

The AI Ambition: From Efficiency to Revenue Engine

While payments remain Paytm’s backbone, its next big growth lever could be artificial intelligence.

In recent quarters, the company’s automation initiatives have already paid off — trimming employee costs by 32% YoY in Q1 and 20% YoY in Q2 to ₹663 crore.

But Sharma’s AI ambitions go far beyond cutting costs.

Paytm is now developing AI-powered tools for merchants — from predictive analytics and digital assistants to smart payment devices — designed to enhance merchant productivity.

These tools are currently being tested internally but could soon be launched commercially. The goal is to evolve AI into a revenue-generating vertical by FY27 — supporting everything from ecommerce to cloud-based merchant services.

With two consecutive profitable quarters, Paytm has successfully turned the corner on stability. But now comes the harder part — sustaining growth and delivering on its new bets.

Between the revival of Postpaid 2.0, the aggressive expansion of its payments arm, and the strategic pivot into AI monetisation, Paytm is trying to reinvent itself for the next phase of India’s fintech evolution.

It’s a bold pivot — one that could redefine its trajectory once again. But the big question remains:

Can Paytm’s three big bets — Postpaid, Payments, and AI — pay off as promised?

Only time, and perhaps the next few quarters, will tell.