Paytm attracts more Gen Z users as its UPI payments growth outpaces industry

Mobile payments pioneer Paytm said its efforts to simplify its payments app and invest in artificial intelligence (AI)-led features are helping attract more Gen Z customers, as the company's UPI payments business continued to grow more than double the broader industry for the second consecutive quarter in a row.

The company reported a 45 per cent year-on-year increase in Consumer UPI Gross Transaction Value (GTV) to Rs 5.9 lakh crore in Q1 FY27, about 2.2 times the industry's growth rate, while Monthly Transacting Users (MTUs) rose by 60 lakh to 8 crore.

Speaking during the company's Q1 FY27 post-results analyst call, Founder and CEO Vijay Shekhar Sharma said the company's focus on improving the app experience, rather than relying on individual financial products, is driving stronger consumer engagement and attracting younger customers.


"The ease and features we've brought out on the Paytm app are driving our growth. We're also seeing new Gen Z customers coming in, and Paytm has increasingly become the preferred choice for Gen Z," Sharma said.

The comments come as Paytm continues to report gains in its consumer payments business, which the company identified as one of its four key growth engines in the quarter. According to the earnings release, product innovation and AI-led customer acquisition have helped the company gain consumer payments market share for five consecutive quarters while growing more than twice as fast as the overall UPI industry.

Management said the acceleration has been driven by higher engagement among existing customers as well as new user additions, supported by continuous improvements to the app experience.

Paytm has focused on offering a clean UI, simple navigation and quick access to everyday payments. Over the past year, Paytm has rolled out several features including Monthly AI Spend Summary, Hide Payments, Total Balance check across multiple bank accounts, Pocket Money, Biometric Authentication, and Send and Receive Money payment widgets as well as Payment Reminders, driving strong differentiation over rivals. Paytm Pocket Money has also been introduced for teens.

Sharma said the company remains focused on increasing retention rather than driving growth through a single lending or financial services product.

"We focus on retention in the consumer business... making (sure) the customer who is with us feels delighted and becomes a more active user of Paytm," he said.

The company's consumer payments momentum contributed to another profitable quarter. Paytm reported an operating revenue of Rs 2,448 crore for Q1 FY27, up 28 per cent year-on-year, while EBITDA rose 182 per cent to a record Rs 203 crore. Profit after tax increased 79 per cent to Rs 220 crore, supported by growth across payments and financial services.

The company also said AI-led operating leverage is helping revenue grow significantly faster than indirect expenses, supporting further margin expansion.

During the analyst call, Sharma added that Paytm has also built and optimised its own India-focused language model to reduce computing costs and improve response times.

"We took a large language model, optimised it for languages, and placed it on our own machines. Effectively, you're talking about low latency and low cost of tokens, run and operated by us. We removed the cost of the call centre, replaced third-party costs with our own AI, and optimised it," he said.