Paytm to monetise in-house AI tools, sharpen wealth push

Digital payments major Paytm plans to turn artificial intelligence (AI) tools developed for its own operations into a new revenue stream within a year by selling them to merchants and other businesses, after reporting a sharp rise in June-quarter net profit on July 20.

Founder and chief executive Vijay Shekhar Sharma said some AI products had already started generating a few lakh rupees in revenue. The company is developing tools for merchant acquisition and servicing, customer engagement, collections and retention, which it plans to offer to small businesses and large enterprises.

Paytm has fine-tuned open-source models and deployed them on its own infrastructure to reduce computing, customer service, and call centre expenses. The AI services revenue will form part of its commerce and cloud business, which currently includes marketing services, Sharma said during the company’s post-earnings call.


AI is also expected to accelerate Paytm’s profitability. Chief financial officer Madhur Deora said revenue was growing significantly faster than indirect expenses, giving the company greater confidence in reaching its medium-term earnings before interest, taxes, depreciation and amortisation (Ebitda) margin target of 15-20%, potentially earlier than expected.

Deora said the business could structurally support margins significantly above that range over time, although management did not provide a fresh target. Paytm’s comparable Ebitda margin, excluding government incentives, increased to 8% from 1% a year earlier. Overall indirect expenses grew 6%, compared with a 28% increase in operating revenue.

Paytm on Monday reported a 79% year-on-year increase in net profit to Rs 220 crore, while operating revenue rose to Rs 2,448 crore. Its board shelved a proposed maiden bonus issue, saying it would prioritise growth and profitability.

Wealth will be another area of increased investment. Sharma said Paytm would focus more aggressively on equity broking, mutual fund distribution and the margin trading facility over the next four quarters. The business is not yet material to Paytm’s overall financial-services operations, but Sharma said it was approaching product-market fit.

The comments followed the board’s approval of an investment of up to Rs 100 crore in Paytm Money for technology, regulatory capital and expansion of its investment and wealth-management operations.

Paytm Postpaid is also ramping up at roughly twice the pace of its previous rollout, Deora said, without disclosing absolute numbers. The credit line on Unified Payments Interface is expected to become a meaningful contributor to revenue and Ebitda from 2027-28.

On the potential return of a merchant discount rate (MDR)—the fee merchants pay for processing digital transactions—Sharma said Paytm did not know the proposed rate or structure and was not factoring it into forecasts. Any MDR revenue would be incremental and largely flow to the bottom line, he said, adding that Paytm’s business model did not depend on it or government payment incentives.

ET reported on July 16 that the government was considering MDR on UPI transactions above Rs 2,000 for large merchants with annual turnover of Rs 1-1.5 crore.

Paytm, which had Rs 13,529 crore in cash at June-end, is evaluating organic and selective acquisition opportunities. Sharma said stress in the fintech ecosystem could make assets more attractively priced, while Deora said capital would be deployed only where returns were compelling.