New Delhi: Noida-based payments major Paytm has pulled ahead in its monetisation journey compared to peers, driven by a more diversified mix across high-monetisation categories such as merchant lending and financial services helping it improve profitability, positioning it strongly within India's evolving fintech landscape, according to a BofA Global Research report.
BofA says Paytm continues to extend leadership in medium to high-monetisation segments such as merchant payments and lending, placing it ahead of rivals with a diversified revenue mix.Also Read: Walmart-backed PhonePe targets up to $10.5 billion valuation in India IPO
The report notes that while consumer payments remain a low monetisation, merchant payments and lending and financial services distribution continue to be medium to high monetisation segments for payment platforms.
In this context, Paytm's revenue mix stands out, with a significantly lower dependence on consumer payments and a higher contribution from merchant payments and financial services distribution.
This diversified mix has enabled stronger margin progression and a more balanced earnings profile for Paytm, positioning it much ahead in its monetisation journey as compared to peers.
For Paytm, payments accounted for only 55 per cent of its total revenues in the first half of FY26, compared with 87 per cent for its closest rival, underscoring a stronger cross-sell engine and a greater ability to cushion itself against regulatory headwinds.
In merchant payment monetisation, Paytm was the first to launch the Soundbox to deepen engagement with small merchants, a model that was later replicated across the industry.
The company continues to lead the market in terms of installed device base, and the Soundbox subscription model delivers roughly 60 per cent EBITDA margins, according to the BofA report. This installed base not only drives subscription revenues but also deepens merchant engagement, creating a natural pipeline for credit distribution.
Interestingly, BofA noted that despite operating at a comparable scale, Paytm compares better on operating expenditure and depreciation and amortisation metrics relative to its peers.
The brokerage also highlighted the Noida-based fintech's growing contribution from lending, insurance and broking providing operating leverage beyond the low-yield UPI ecosystem.
In B2B merchant lending, Paytm enjoys a clear first-mover advantage and is well positioned to sustain its lead, according to the brokerage.
BofA estimates that around Rs 9 billion (Rs 900 crore) of Paytm's lending revenues in H1 FY26 were merchant driven, underlining the scale it has achieved in this higher-margin segment.
In contrast, its closest competitor reported around Rs 3 billion (Rs 300 crore) of lending revenues in H1 FY26, underscoring that Paytm's lending scale is roughly three times larger. The report expects the company to maintain its leadership in merchant lending as the ecosystem expands.
The brokerage also points out that Paytm could be among the biggest beneficiaries of key regulatory developments, including potential market share caps in UPI and proposals to provide subsidies only to smaller merchants. Given its strong merchant footprint, such changes could strengthen its competitive positioning.
Beyond payments and lending, Paytm is sharpening its ambitions in wealth management. During its third-quarter conference call, the company said it intends to make Paytm Money one of the top five entities in the space over the next three years.
It has been steadily increasing its market share in active demat accounts and has moved up the rankings, signalling growing traction in the broking and investment segment.
Taken together, BofA's assessment suggests that Paytm's diversified exposure to higher-monetisation verticals, strong merchant franchise and improving profitability place it ahead of peers as India's fintech market shifts from scale-driven growth to sustainable earnings expansion.
BofA says Paytm continues to extend leadership in medium to high-monetisation segments such as merchant payments and lending, placing it ahead of rivals with a diversified revenue mix.Also Read: Walmart-backed PhonePe targets up to $10.5 billion valuation in India IPO
The report notes that while consumer payments remain a low monetisation, merchant payments and lending and financial services distribution continue to be medium to high monetisation segments for payment platforms.
In this context, Paytm's revenue mix stands out, with a significantly lower dependence on consumer payments and a higher contribution from merchant payments and financial services distribution.
This diversified mix has enabled stronger margin progression and a more balanced earnings profile for Paytm, positioning it much ahead in its monetisation journey as compared to peers.
For Paytm, payments accounted for only 55 per cent of its total revenues in the first half of FY26, compared with 87 per cent for its closest rival, underscoring a stronger cross-sell engine and a greater ability to cushion itself against regulatory headwinds.
In merchant payment monetisation, Paytm was the first to launch the Soundbox to deepen engagement with small merchants, a model that was later replicated across the industry.
The company continues to lead the market in terms of installed device base, and the Soundbox subscription model delivers roughly 60 per cent EBITDA margins, according to the BofA report. This installed base not only drives subscription revenues but also deepens merchant engagement, creating a natural pipeline for credit distribution.
Interestingly, BofA noted that despite operating at a comparable scale, Paytm compares better on operating expenditure and depreciation and amortisation metrics relative to its peers.
The brokerage also highlighted the Noida-based fintech's growing contribution from lending, insurance and broking providing operating leverage beyond the low-yield UPI ecosystem.
In B2B merchant lending, Paytm enjoys a clear first-mover advantage and is well positioned to sustain its lead, according to the brokerage.
BofA estimates that around Rs 9 billion (Rs 900 crore) of Paytm's lending revenues in H1 FY26 were merchant driven, underlining the scale it has achieved in this higher-margin segment.
In contrast, its closest competitor reported around Rs 3 billion (Rs 300 crore) of lending revenues in H1 FY26, underscoring that Paytm's lending scale is roughly three times larger. The report expects the company to maintain its leadership in merchant lending as the ecosystem expands.
The brokerage also points out that Paytm could be among the biggest beneficiaries of key regulatory developments, including potential market share caps in UPI and proposals to provide subsidies only to smaller merchants. Given its strong merchant footprint, such changes could strengthen its competitive positioning.
Beyond payments and lending, Paytm is sharpening its ambitions in wealth management. During its third-quarter conference call, the company said it intends to make Paytm Money one of the top five entities in the space over the next three years.
It has been steadily increasing its market share in active demat accounts and has moved up the rankings, signalling growing traction in the broking and investment segment.
Taken together, BofA's assessment suggests that Paytm's diversified exposure to higher-monetisation verticals, strong merchant franchise and improving profitability place it ahead of peers as India's fintech market shifts from scale-driven growth to sustainable earnings expansion.
