How Paytm is using AI for in-house ops

Vijay Shekhar Sharma-led Paytm reported a profitable Q1 FY2026, attributing its operational efficiency and product innovation to artificial intelligence (AI) integration across the business.

The fintech major said it is deploying AI across its operations to streamline workflows and increase fraud and risk management.

In its latest earnings presentation, Paytm highlighted multiple AI-first features integrated into both internal processes and consumer-facing products.


1) Paytm said it is using AI-led quality checks for merchant onboarding, including advanced image analysis and text recognition. With AI, verification is done through algorithms for merchant category code (MCC) deduction from shop photos, name matching, and optical character recognition (OCR).

An MCC is a four-digit number that classifies businesses based on the types of goods or services they offer. These codes help payment networks standardise transactions and ensure accurate processing.

2) Paytm’s in-house AI platforms like Paytm ARMS (merchant lifecycle insights platform) and Paytm Pi (fraud and risk detection system) automate merchant onboarding, fraud detection, segmentation, and pricing optimisation.

These proprietary fraud and risk detection AI engines help monitor merchant activity. It reports anomalies and predicts chargeback risks, including high-ticket refunds.

3) The company uses conversational AI agents to provide personalised assistance to customers via text and voice across 11 languages.

4) The ARMS platform also uses AI to profile merchants in real time and match them with the right financial products to improve retention and effective cross-selling.

5) On the customer side, Paytm has integrated an AI assistant in partnership with Perplexity for users.