Paytm Eyes New Horizons With Enterprise AI & Wallet Revival

Nearly two years after shifting its focus from chasing scale to building a profitable fintech business, Paytm is now laying the groundwork for another transition. 

This time, the company is looking beyond transaction fees and lending commissions to create new revenue engines: enterprise AI software while simultaneously working to bring back one of its oldest consumer products – the digital wallet.

During its Q1 FY27 earnings call, founder and CEO Vijay Shekhar Sharma said Paytm plans to commercialise several AI products that the company has built internally and sell them to merchants and enterprises. 

At the same time, the management signalled that reviving Paytm’s wallet business remains an important part of its consumer strategy. However, it stopped short of providing an update on the company’s pending application with the Reserve Bank of India (RBI) for a prepaid payment instrument (PPI) licence, an authorisation necessary to offer digital wallets.

The strategy comes as Paytm posted one of its strongest quarterly performances in recent years. The fintech major reported a 78.8% YoY increase in consolidated net profit to ₹220 Cr in Q1 FY27, while revenue rose 27.6% YoY to ₹2,448 Cr. 

The company attributed the performance to accelerating merchant payments, compounding merchant loan distribution, stronger consumer payments, improved monetisation through wealth products and operating leverage unlocked by AI deployment.

From Cost Optimisation To AI Products

While Paytm has previously spoken about using AI to improve productivity and reduce costs, Sharma in Q1 FY27 earnings call said that the company has now begun generating revenue from AI itself.

“I fundamentally believe that… we will start to see a revenue monetisation journey of AI,” he said, adding that some of the company’s AI offerings are already generating “a few Lakhs” in revenue.

According to Sharma, Paytm intends to package and commercialise AI tools that were originally built for its own operations. “Once we’ve done it, we’ll sell it to outside people. Why will we not sell it?” he said.

The fintech juggernaut plans to offer AI-powered solutions across merchant acquisition, customer engagement, collections, customer support and business automation. 

Sharma said Paytm itself is the first customer for these products before external businesses. “We definitely have decided that we will go to the merchants and the businesses with the solutions and services that we created, and we ourselves are the users of them”.

He added that smaller merchants and larger enterprises would receive different AI offerings depending on their requirements.

The company also said AI is helping optimise its infrastructure by enabling it to run compressed language models on its own computing stack, reducing dependence on expensive external inference infrastructure.

During the call, chief financial officer (CFO) Madhur Deora also linked AI to Paytm’s long-term profitability, saying that the technology enables the company to “do more with less”. 

Chiming in, Sharma indicated that AI, combined with the high-margin nature of financial services and software products, could eventually enable Paytm to target EBITDA margins beyond its existing long-term guidance of 15%-20%.

Wallets Still Part Of Consumer Playbook

Alongside AI, Paytm also continues to pursue the revival of its wallet business. Responding to an analyst’s question during the earnings call on the company’s PPI application, the management suggested that a combination of the wallet and Paytm Postpaid (its credit-on-UPI offering) could further strengthen its consumer payments ecosystem.

While the executives did not provide any update on the regulatory process, they also did not dispute the application. Instead, Deora highlighted the improving monetisation across the consumer business, citing tailwinds in Postpaid, personal loans, equity broking and wealth management products.

The comments a day after the fintech major, in an earnings release alongside its Q1 FY27 results, confirmed that Paytm Payments Services Ltd (PPSL) has applied to the RBI for a PPI licence, which would enable it to relaunch its wallet business following RBI’s clampdown on Paytm Payments Bank in 2024.

The wallet is unlikely to materially contribute to revenue on its own. However, industry analysts view it as an important engagement layer that could increase payment frequency and improve cross-selling opportunities across Postpaid, wealth management and consumer lending.

Sharma also identified wealth management as the company’s next major area of expansion, signalling that Paytm increasingly sees consumer financial services, not just payments, as a key growth driver.

Building Beyond Payments

Sharma’s viewpoint reflects a broader shift in Paytm’s business model. While payments remain the company’s largest revenue contributor, accounting for more than 56% (or ₹1,384 Cr) of its total revenue in Q1 FY27, financial services revenue climbed 45% YoY to ₹814 Cr, supported by merchant lending, personal loans, equity broking and wealth products.

The company also said AI-powered personalisation is increasing engagement and revenue per active customer across its investment and wealth tech offerings, while merchant loan distribution continues to benefit from its growing merchant ecosystem.

Separately, Paytm’s board approved an investment of up to ₹100 Cr in subsidiary Paytm Money to support technology investments, regulatory capital requirements and the expansion of its wealth management business. It also approved greater flexibility in utilising the remaining ₹1,686 Cr of IPO proceeds for strengthening its core ecosystem and pursuing new business initiatives through March 2029.

Taken together, the announcements suggest Paytm is entering a new phase where profitability is no longer the only objective.

Instead, the company is attempting to build multiple high-margin businesses, from AI software and wealth management to consumer financial services, while using a potential wallet revival to deepen engagement across its ecosystem. With this, it aims to reduce its dependence on transaction-led payments revenue over the long term and build a differentiated ecosystem.

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